MaxduPreez on Twitter – Zuma simply cannot afford a proper judicial inquiry into SARS. It would destroy him and Tom Moyane.
So what’s up, @mgigaba? 07 Nov 2017, 2:15 PM
JOHANNESBURG – REUTERS
South Africa will launch an inquiry into weak tax collection by the revenue service after receiving the approval of President Jacob Zuma, Finance Minister Malusi Gigaba said on Tuesday.
Gigaba shocked financial markets last month by flagging wider deficits and rising government debt in a closely watched budget speech, attributing the dismal forecasts to sluggish growth and low tax receipts.
On Tuesday he told a news conference that Zuma had granted his request for an inquiry by a judge into the administration and governance of the South African Revenue Service (SARS).
He added that the inquiry would be set up soon.
“It is critical for government to determine the cause of the tax revenue under-collection in order to enable government to take urgent remedial steps to ensure that SARS is able to meet its revenue targets,” Gigaba told reporters.
South Africa’s strained public finances are in the spotlight ahead of ratings reviews scheduled by major international agencies Moody’s and S&P Global later this month.
If Moody’s and S&P downgrade South Africa’s local-currency rating one notch to sub-investment grade, or “junk” status, that could trigger forced selling of up to $12 billion of the country’s bonds.
The gloom is compounded by allegations of influence-peddling in government that have hurt investor confidence, as well as infighting in the ruling African National Congress as it prepares to elect a new leader to succeed Zuma in December.
“We expect this inquiry to be constructive and to strengthen the institution further where possible. It is critical for Government to determine the cause of the tax revenue under-collection in order to enable Government to take urgent remedial steps to ensure that SARS is able to meet its revenue targets as set out in the Medium Term Budget Policy Statement (MTBPS) and Budget.
The inquiry will help to assess what factors are responsible for the under-collection of revenue by SARS, and what steps need to be taken to improve performance management systems at SARS to improve its capacity to collect revenue.
The MTBPS recognized that whilst the economic cycle is the most likely and significant factor driving lower revenue-collection, other factors could also be at play, like weakening tax morality and challenges facing tax administration. Whatever the reason for such shortfall, the risk of under-collection of revenue impacts directly on the size of the future budget deficits, and hence on the sustainability of the projected debt-to-GDP trend, and directly on our credit rating and growth prospects.”
Alf Lees MP
DA Shadow Deputy Minister of Finance
The DA welcomes Finance Minister, Malusi Gigaba’s, announcement today that a Commission of Inquiry will be established to look into issues at the South African Revenue Service (SARS).
These are not new issues, but have been plaguing the SARS for some time now, and include:
• The mass exodus of Senior and effective employees;
• Reports of unlawful (according to the Auditor-General) bonuses paid out to SARS executives;
• Undue delays and wrongful obstructions to tax refunds;
• As well as factually incorrect communication surrounding people’s tax returns.
The problems are clearly not new and have only worsened through the course of this year. The latest estimates, announced in the Medium Term Budget Policy Statement, pencil in a staggering revenue shortfall in excess of R50 billion for the current financial year.
In light of the continuing deterioration of the situation at SARS, the terms of reference that will guide the inquiry need to be defined and must be made public as soon as possible.
With the wide range of issues plaguing the SARS, the leadership of the institution must be thoroughly investigated, and the scope of the inquiry must extend at least as far back as when Tom Moyane was first appointed as the Commissioner of SARS.
This is imperative in ensuring transparency and openness over an issue that has to date been mired in a cloud of confidentiality.
The deterioration of the public’s trust in SARS must be halted to avoid further shortfalls in revenue collections.