What taxpayers want from the president’s SARS inquiry
Acting SARS chief Mark Kingon acknowledges that restoring taxpayers’ trust in the revenue service is vital to improving tax morality
SARS acting commissioner Mark Kingon says many of the problems facing the revenue service have been "self-inflicted" and must be fixed with haste, since the fiscus is in desperate need of resources.
The South African Revenue Service’s top team has committed itself to rebuild the reputation of the agency to provide an effective, professional, transparent and fair service to taxpayers.
Kingon told the recent South African Institute of Business Accountants summit that trust in a tax authority is the most important factor in ensuring compliance, and turning around rampant noncompliance because of the current trust deficit is crucial for SA to succeed.
"Tax abuse must be reported quickly, but at the same time SARS must take it seriously and act on it without fear or favour."
SARS is the subject of a commission of inquiry into its affairs during the time when Tom Moyane — who has been suspended as commissioner — was at the helm.
Tax practitioners say compliant taxpayers have high hopes that the presidential commission of inquiry will bring certainty and speedy resolutions to their tax matters.
Heavy-handed tactics by SARS officials, the withholding of legitimate refunds, repeated audits, and unabated allegations of maladministration and mismanagement, have eroded trust in SARS.
The terms of reference for the commission are quite explicit about what needs to be investigated but the initial impression is that its primary focus is on past events, says Kyle Mandy, head of tax technical at PwC.
Mandy says while it is necessary to review the past to find out what went wrong, it is equally important to determine what is required to make SARS effective and efficient again.
This goes beyond just the governance and operating models referred to in the terms of reference.
"It includes aspects such as skills, technology, institutional knowledge, strategy and the balance between taxpayer rights and the powers of SARS."
Mandy acknowledges that the commission has been given a wide scope to consider these critical issues.
What taxpayers would like to see
Betsie Strydom, partner at law firm Bowmans and a committee member of the South African Institute of Tax Professionals, says taxpayers want certainty and speedy resolution of their queries and disputes.
Disputes with compliant taxpayers are often delayed unnecessarily because SARS fails to respond to correspondence.
Taxpayers have every right to expect that the inquiry will enhance the protection of their rights, and that they will be respected in proceedings where SARS interacts with them, Strydom says.
There are two broad themes where change should happen, says Mandy: SARS’s ability to enforce collections from noncompliant taxpayers and its ability to live up to the "service" part of its name.
The capacity to go after tax evasion — where some of it involves organised crime — has to be rebuilt, Mandy says.
There are already signs of increased enforcement, such as the latest application by SARS to conduct an inquiry into the tax affairs of Bravura Equity Services and several other related entities for alleged tax evasion or avoidance.
SARS needs to attract the skills to address complex tax avoidance, and it needs to be insulated from political interference.
In terms of the service offered to taxpayers, Mandy says compliant taxpayers need to be treated fairly, equitably and with respect.
"SARS needs to invest in the development of the skills and legal knowledge of its staff. Systems need to be changed to ensure compliant taxpayers are not audited repeatedly."
Barendine Duvenhage, managing partner at the expatriate consulting firm Nomadiqs, says the commission of inquiry has to have teeth.
"Those found guilty of wrongdoing, after due consideration and process, should be brought to book and not simply shipped to another department."
She also expects the reports by the team heading the inquiry to be delivered on time and, to the extent allowed by law, the findings to be made public.
Strydom says as a tax practitioner, she would like to see "guaranteed responses to correspondence within published and realistic time lines".
She would expect an improvement in the training and skills of SARS officials at branch offices.
Tax practitioners and taxpayers must be able to have access to officials and not just a call centre.
Strydom wants to see an end to letters generated by a computer that make no grammatical or legal sense.
She also hopes the "pay now, argue later" principle will be reconsidered. "It is unreasonable to require taxpayers to face an unduly large tax bill, and also to have to incur the legal costs necessary to conduct a tax case against SARS."
She would like a proposal of the Davis Tax Committee to be considered: that taxpayers are not required to make payment until there has been an impartial review.