Dented confidence in Sars, a shrinking tax base and the state of the economy could hamper reaching R1.345 trillion.
The taxman may have bitten off more than he can chew, with a revenue target of more than R1.3 trillion this tax season, according to an analyst.
Briefing media yesterday, Finance Minister Nhlanhla Nene and acting South African Revenue Service (Sars) commissioner Mark Kingon announced several upgrades to the revenue collector’s efiling system and renewed efforts to tackle defaulters and illicit trades, such as the illegal tobacco industry, in a bid to restore confidence in the embattled institution and rake up enough money to reach the country’s economic growth targets.
While Nene said he was confident in Sars’ initiative to return the institution to its former glory in the eyes of South Africans, economist Dawie Roodt suggested that the ship may have already sailed.
“I really do believe people out there are fed up with Sars and fed up with the mismanagement, the corruption and misallocation. A tax revolt is very difficult to start, but it is even more difficult to put to an end. We are currently witnessing an example of that with e-tolls. That is a very successful example of a tax revolt.”
According to Roodt, the institution had obstacles to overcome to meet the “unlikely” revenue target of more than a trillion rand.
“First of all, with this target there are a couple of potential headwinds. The first is to do with the economy and the shrinking tax base. We are looking at a really distressed economy. The other is to do with the lack of skills now at Sars, the institution. They have lost a lot of skilled people. They need to restore the country’s trust in the entity.”
He added that such efforts were critical to boosting the economy.
“I would want us to desist in getting in too deep into what is coming out of the commission until the commission has completed its work. I think we need to give these processes time to play out because if we make our statements, it’s as if we are participating in the commission without being there.
“But coming to confidence, whether it is coming out in the commission or not, it’s an area where we should focus our attention. It is looking into how best to regain the confidence of South Africa… the initiatives that [Kingon] spoke about and the team here is embarking on, [are] precisely intended for that. We need to rebuild the relationship between the institution and South Africans.”
Kingon said various divisions were working closely together at Sars to identify the most notorious evaders, but admitted their target was an ambitious one.
“[R1.345 trillion] is giving me sleepless nights … Yes it’s expected of me and I know there is a lot of effort that will have to go in. People have spoken about confidence in the tax system. Obviously that impacts. As I have indicated before in April, we sat with 14 000 VAT vendors who chose simply not to pay over a billion rands. Now that type of behaviour has a significant impact on us being able to achieve the (R1.345 trillion).”