Kieswetter is fighting state inefficiency from within

FEBRUARY is a busy month for the Commissioner of the South African Revenue Service, Edward Kieswetter. Next week he presents the tax authority’s annual report to Parliament’s Standing Committee on Finance, he is attending the National Budget speech on the 22nd, and he’ll be the keynote speaker at the Personal Finance Raging Bull Awards ceremony at the end of the month.

Kieswetter hit the ground running when he took up the position and walked into a demoralised SARS on May 1, 2019.

In an interview at the time, he said that his three priorities were to get staff back on board, win back the hearts of the South African people and present a turnaround plan for the beleaguered revenue service.

Kieswetter also worked at SARS between 2004 and 2009, serving as a founding group executive of the large business centre and high-net-worth unit, in the capacities of both Chief Operating Officer and Deputy Commissioner.

Fast forward four years, it seems SARS has not only emerged from the shadows of state capture, but turnaround efforts have paid off handsomely. The Minister of Finance, Enoch Godongwana, mentioned in his Medium-Term Budget Policy Statement (MTBPS) last year that tax collections had exceeded all expectations, and speaking at a PSG Think Big Series webinar, “The Future of Taxation”, this week, Kieswetter said that, in terms of measurable progress, there had been improvements in revenue collection, compliance trends and trade facilitation – with all of these on an encouraging upward trajectory.

Increasing revenues

According to the Budget in February last year, tax revenues were expected to grow by 3.3% (R1 547bn to R1 598bn) in 2022/23, but at the MTBPS Godongwana said gross tax revenues were expected to exceed these estimates by R83.5bn, with corporate income tax expected to account for R62.8bn. Stronger personal income tax collections were expected to bring in an additional R8.2bn relative to the 2022 Budget Review projections.

Treasury also published encouraging fiscal data in December, posting a surplus of R45bn, in line with this broad-based and bulging tax collection initiative.

Kieswetter said SARS provides about 90% of total government revenue, which makes this increase in collections highly significant.

“The work of SARS is central in that efficient tax revenue collections contribute to the fiscal space required to attend to important social and investment spending priorities while keeping an eye on debt service costs,” he said in a media statement following the MTBPS.

Making a difference

In the webinar Kieswetter said that as a passionate South African he had decided not to stand on the sideline and criticise but to roll up his sleeves and make a difference. As a member of the government he wanted to ensure it worked for its citizens.

“I speak without fear and favour, and when I see wrong in government I'm not going to hold back simply because it's politically correct,” he added.

On whether he was worried that a tax revolt was a possibility because of unhappiness about the lack of accountability and the continuing downward spiral of service delivery, only exacerbated by recent load shedding, Kieswetter said: “People are tired of excuses and lack of delivery. But I believe that the majority of South Africans are moderate and will think long and hard before joining a tax revolt. Not a service delivery march – but withholding taxes. They know this will hurt the population at large.”

The commissioner said he has a direct line to the National Treasury and talks to them regularly. “I'm very forthright in my conversation and feedback to my minister,” he said.

“When I'm part of the various conversations in government, whether it's the energy crisis committee, or the economic cluster discussions, I don't hold back.

“I give them frank feedback about where I think we are failing and letting ourselves down and underscore the fact that we have not done enough to earn the credibility that South Africans are entitled to and should be experiencing from a government that should be quite rightly addressing our challenges of poverty, inequality, poor education and slow or no economic growth.”

Inefficient processes

On how he rated the political will to positively change conditions materially for South Africans, Kieswetter said his personal observation was that it was less a matter of politics than of competence and efficiency.

As the former CEO of Alexander Forbes, Kieswetter said that, in his experience, at a listed company things move a lot faster. He said government, unfortunately – and regardless of the intent of the Public Finance Management Act (PFMA) or certain regulations – was plagued by inefficient procurement processes and inefficient recruitment practices, and processes that should take a day or two took literally months, because there were so many signatories and desks to go through.

“Being on both sides, one of my biggest frustrations is that when you have to make a decision that just makes so much sense, you are constrained by a framework that has been designed to regulate, not to liberate.”

Kieswetter said his greatest disappointment was that the PFMA had not prevented wholesale corruption between the public and private sector during the Covid-19 pandemic. “Billions was stolen by the political elite working and colluding with private enterprise to defraud the fiscus.

“We can never sit back and say that's fine, because we're fighting a noble cause,” he said.