President Cyril Ramaphosa says the turnaround of the South African Revenue Service (SARS) – from an inefficient revenue collector to hitting its highest margins in years – is proof that efficient and well-run state institutions can bolster trust between government and citizens.
The President was addressing the nation through his weekly newsletter.
Last week, SARS Commissioner Edward Kieswetter announced that the revenue collector had recorded a 25% increase in collections – reaching at least R1.5 trillion in revenue collection between April 2021 and March this year.
“As we forge ahead with efforts to strengthen the capacity of the state and rebuild institutions that were systematically weakened by state capture, we have much to learn from what SARS has achieved in a relatively short space of time.
“When state institutions are well-run and efficient, when they demonstrate credibility and fairness in their operations, this contributes to increasing levels of trust in government. Business and investor confidence also improves, encouraging greater investment and economic growth,” President Ramaphosa said on Monday.
The President reflected on a challenging period that the revenue collector has faced, including allegations of state capture, “political meddling and mismanagement” which had rendered SARS inefficient and ineffective.
“This had the direct consequence of not only undermining taxpayer morality, but also loss of business confidence in the organisation.
“In 2018, I appointed a commission of inquiry into tax administration and governance at SARS chaired by retired Justice Robert Nugent. The commission delivered its final report by the end of the same year. Four years later, SARS has implemented nearly all of the 16 recommendations and 27 sub-recommendations to restore stability to the organisation,” he said.
Since the implementation of those recommendations, the revenue service has claimed several victories.
“The Illicit Economy Unit that was reconstituted in 2018 has notched up a number of successes in combating illicit economy trades, including through a focus on customs non-compliance. Tax collection from JSE listed companies, multinationals and high net worth individuals is now more effectively managed through its Large Business Unit, which was relaunched in 2020.
“SARS is taking the wind out of the sails of tax dodgers, beneficiaries of the proceeds of crime, and those involved in corrupt activities. It is well established that ‘the taxman’ is one of the most efficient tools to combat corruption.
“In cases where an individual’s lifestyle does not match what they declare, SARS has been conducting lifestyle audits. In the last year, SARS has completed lifestyle audits that resulted in the collection of a further R474 million. As a result of SARS’ turnaround there has been improved compliance in personal income tax, corporate income tax and Pay as You Earn (PAYE),” he said.
The President highlighted that efficient revenue collection is critically important to South Africa as it “finances service delivery and infrastructure” and the execution of government’s plans.
“Tax revenue propels our nation’s development. Through the R17.8 trillion that SARS has collected since its establishment in 1997, we have been able to build more social infrastructure like clinics, schools and hospitals, upgrade and build new roads, and support society’s most vulnerable through social grants and other measures.”
President Ramaphosa said officials at the revenue service ought to be “congratulated” for the performance they delivered over the past financial year.
“Thanks must [also] go to the loyal South African taxpayer. Without their cooperation, the latest revenues would not have been possible. That SARS has expanded the tax base with 1.8 million new registrations over the past year is another sterling achievement.
“We can only rebuild South Africa if we continue to meet this shared obligation, and if we intensify the work currently underway to ensure that these taxes are used wisely and efficiently,” President Ramaphosa said.
Source: South African Government News Agency