SA cannot give sovereignty to international lenders, Sars’s Kieswetter warns

SA Revenue Service (Sars) commissioner Edward Kieswetter has sounded a warning against bailouts for SA from international organisations.

Government bailouts for embattled power utility Eskom and calls from other state-owned entities (SOEs) for support have placed strain on the country’s fiscus, which, according to some business groups and analysts, could force SA to ask the International Monetary Fund (IMF) for a bailout to curb the ballooning debt.

“Fundamental to building a capable state is functional fiscal authority [and] integral to this is a capable revenue authority. ... Our national anthem and our flag will mean nothing if we have to hand away our sovereignty to the multilateral funding agencies who effectively will own us once we lose our financial independence,” Kieswetter said at a Tax Indaba in Sandton on Monday.

Both the IMF and the Reserve Bank have said the government can turn the situation around and that SA does not need support from international lenders yet.

Kieswetter, however, said that SA’s current economic context of “low to no growth” does not bode well for revenue collection.

The demand for funds has increased because of the bailout of critical SOEs and “necessary social programmes” such as education, health and land reform that requires money SA does not have, he said.

“When our revenue collection is undermined this traps us in a vicious cycle or revenue decline which we have experienced and consequently the need to go with begging bowls to borrow money which effectively mortgages our future,” he said.

“If Sars fails, our democracy fails,” he said.

Kieswetter, who has the difficult task of restoring confidence in the revenue service, took up the job on May 1, succeeding Mark Kingon, a Sars veteran who took over in an acting capacity after President Cyril Ramaphosa suspended Tom Moyane in 2018.

Moyane was later fired in November, in line with recommendations from judge Robert Nugent, who headed a commission of inquiry into governance failures at the institution.

The failures were blamed for revenue shortfalls that led to a VAT increase in 2018, the first in more than two decades, which has put a strain on consumers. ​

Speaking at the same event, deputy finance minister David Masondo said: “All aspects of our fiscal policy are not looking good despite quite significant policy adjustments made in the recent past, tax revenue has been declining.” 

“The anticipated budget deficit this year will be at 4.5% and that is before the impact of transfers to Eskom. Our debt service costs are high from our social- and growth-enhancing expenditure. We need to ensure that our fiscal policy is sustainable so we can sustain state legitimacy,” he said.

menons@businesslive.co.za