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SARS Commissioner Edward Kieswetter Photo: Getty Images
- South African Revenue Service Commissioner Edward Kieswetter said that the insufficient SARS recovery of R300 billion was based on reduced tax revenue affected by the state of the economy and the unintended consequences of the shutdown.
- Kieswetter said corruption existed even among companies that supplied the government with personal and protective equipment during the Covid-19 pandemic.
- Kieswetter said that the prohibition of alcohol and tobacco had the subsequent effect of triggering a fiscal commitment of R12 billion in the last four months.
South African Tax Service Commissioner Edward Kieswetter warned that the country’s tax authority was in the midst of a credibility battle amid an already disastrous pandemic that has undermined the fiscus’s ability to enforce revenue collection.
Weak growth, non-compliance and corruption created a perfect storm that affected SARS ambitions for the year above Covid-19 and the impact of the national lockdown on the ability of companies to operate and the ability of South Africans. to make a living.
Speaking to journalists during a virtual briefing that since 2014, Kieswetter said that SARS was “… an unfortunate victim of the state capture project,” which had serious consequences, including a decrease in revenue performance, as well as a decrease in public confidence and taxes. morality.
“The drop in revenue was a tragedy because we were also like South Africa in a drop in economic performance.”
Last month, it emerged that SARS suffered an insufficient recovery of R47 billion, which was more in tax revenue than the combined amounts that South Africa had borrowed from the International Monetary Fund and the African Development Bank to respond to the Covid pandemic. -19.
In smoke
Kieswetter said he fully understood that the government needed to contain the spread of the virus to protect the healthcare system by imposing a ban on the sale of alcohol and cigarettes, but said this had undeniable consequences in a devastating impact on revenue collection.
“We are seeing a commitment of R10 billion in the first four months. The after-effect of that is at least another R2 billion leading to a fiscal commitment of R12 billion.
“The tragedy of that is that illegal operators have embedded themselves in the system and used the restrictions to market themselves. It will take us years to reverse the unintended consequences of the impact of alcohol and cigarettes,” Kieswetter said.
Tobacco companies have asked the government to expedite the development of a tobacco product track and trace system to ensure compliance. Kieswetter said that SARS had started a new process in developing a system that could “be integrated throughout the value chain” of multiple industries.
Providers among the absent
Kieswetter said there was corruption even among companies that supplied the government with personal and protective equipment during the Covid-19 pandemic and that even among them, suppliers were found to be failing to comply with their tax affairs.
“I even found out that a contract was verbally awarded for R60 million. The levels of abuse are just dire. Companies that were never in the PPE business got tenders. Companies that were registered as pubs, bakeries and management companies events got bids and then I wonder why, “he said.
Kieswetter said SARS was investigating 63 non-compliant contributing companies where evidence of a range of crimes was found, including failure to disclose as a supplier of PPE acquisitions.
Kieswetter said that Covid-19 simply exposed structural weaknesses in the state of our economy and that work fell on SARS to improve its perceived credibility so that it could raise much-needed tax revenue to help the most vulnerable South Africans, still reeling from the blow. of COVID-19.
“We will have to do the hard work of rebuilding trust. Sadly, in the environment we find ourselves in, criminals thrive and we have seen a lot of criminal activity. We are not yet at the level we would like to be in responding to our mandate, but that is a work in progress, ”he said.
He said SARS used the pandemic to implement changes to its operations, such as machine-driven information, artificial intelligence, remote solutions and other technologies that it said will be the foundation for helping SARS reinvent its work.
