The South African Revenue Service (Sars) is emerging after State capture allegations and has made progress in several areas; however, there is still considerable work to be undertaken to get the institution to where it needs to be, Sars Commissioner Edward Kieswetter said on February 7.

Speaking during financial advisory network PSG Konsult’s “Future of Taxation” episode of its Think Big Series, he said that taxpayers should hold the institution accountable when it occasionally drops the ball.

“We should not hide behind any of our inefficiencies,” he emphasised.

In terms of some measurable progress, Kieswetter outlined that there had been improvements in revenue collection, compliance trends and trade facilitation – with all of these on a positive upward trajectory, showing encouraging signs of growth.

However, he said that comparing these improvements against the challenges and constraints still faced showed that there was still much to be done.

Some of the constraints included Sars presenting itself as an attractive employer, with the private sector able to offer higher remuneration and benefits. Kieswetter said Sars was, however, slowly reclaiming its position as an employer of choice, thereby enabling it to attract the skills it required.

He pointed out that the revenue service had appointed 500 additional employees skilled in technical areas during 2022 and that it was also employing the first 50 of a cohort of new service consultants.

“We're doing multiple interventions to improve our attractiveness in order to improve our efficacy as a revenue administration, thinking about the level of data science, technology and artificial intelligence we need,” Kieswetter said.

He also pointed out that there were opportunities to improve revenue collection, such as addressing the many levels of noncompliance.

Kieswetter said that what would provide real benefit was growth in the “compliance dividend”, with additional revenue coming, notwithstanding the economic climate, from focused efforts by Sars employees to collect every available rand.

“The bad news is we have low levels of compliance in relative terms. The good news is it provides us low hanging fruit to work on.”

Kieswetter also highlighted Sars’s efforts in risk profiling and using artificial intelligence. He pointed out that, last year, the institution prevented the outflow of R42-billion in fraudulent refund claims.

Kieswetter pointed out that loadshedding would have a material impact on Sars’ ability to collect revenue, with economic growth severely impacted and many companies, especially small businesses, closing.

Also, he said that during times of crisis, people tend to be ultraconservative, and where there was an opportunity, tempted to withhold taxes, which required additional efforts by Sars. 

He emphasised that Sars did not do this out of desperation, nor to become heavy-handed with taxpayers, noting that staff needed to be held to the highest level of professionalism.

Rather, he said that Sars knew that collecting every rand available would reduce the need to borrow in a difficult market.

Kieswetter also said the aim remained to not raise taxes, but that this could not be completely dismissed later if pressures rose.

“Right now, I think our collective mindset is rather on improving administrative competence, and not on increasing the burden on taxpayers,” he indicated.   

With regard to tax incentives being offered for people keen to explore alternative energy sources, to alleviate pressure on the grid, Kieswetter said the National Treasury should be reviewing what additional provisions could be made to provide some relief and provide an incentive for people to make an investment and become more self-sufficient.

However, he pointed out that using tax as a way to correct a particular behaviour in society was often not the most effective way to achieve a target.

Kieswetter also touched on the emigration issue, noting that this had been overstated.

“Last year, just more than 6 000 people left. And, in fact, at the top end of the earnings bracket, it is a lot lower than 6 000.

“So, I think we need to understand better, what is the quantifiable impact of immigration. I think the soft impact is high. Every South African that leaves because they have lost confidence in the system is bad for us,” Kieswetter pointed out.

He added, however, that the overall fiscal impact was not as it was often sensationalised to be.

Kieswetter acknowledged that the majority of South Africans were completely disenchanted, and rightly so, with the current state of affairs including the lack of delivery, the slow progress made and especially the inordinate disruption to social and economic activity brought about by loadshedding.

However, he said he believed the majority of people were cognisant of the fact that a tax revolt would hurt the most vulnerable who rely on social grants and would exacerbate the problems rather than assisting with solutions.

Kieswetter also acknowledged that there was merit to the argument that people were paying taxes, and still having to resort to private sector avenues owing to a lack of service delivery. In this regard, he said a tax revolt would not be the solution either.

Rather, he called for South Africans to remember that the democratic process brought about change, and that they had the power to hold government accountable if it was not delivering.

Kieswetter noted that there was enough political will to make the requisite changes. He suggested that the problem was one of competence. He pointed out that inefficient processes were hindering the ability to make sound and necessary changes, with the framework designed to constrain, rather than free up resources.

Moreover, he said that none of the State of Disaster regulations had actually prevented wholesale corruption between the public and private sector during the Covid-19 pandemic, with billions of rands stolen.