Tom Moyane. Picture: TREVOR SAMSON
Tom Moyane. Picture: TREVOR SAMSON

Under-fire South African Revenue Service (SARS) commissioner Tom Moyane says the service is committed to achieving the increased revenue target for 2018, but low tax morality could be a stumbling block.

On Wednesday, Finance Minister Malusi Gigaba lifted the new tax-collection target from R1.214-trillion to R1.217-trillion.

Gigaba also said SARS had improved collection by R2.6bn, slashing the R50bn shortfall projected in October.

This was the result of an improvement in company and trade tax collection in the fourth quarter of 2017.

The Treasury still expected a shortfall of R48.2bn for 2017-18, a reflection of weak economic growth, administrative challenges at SARS and increased tax avoidance.

To stem tax avoidance and boost public confidence in SARS, which has been mired in controversy, President Cyril Ramaphosa announced in his state of the nation address that an inquiry into the revenue service would go ahead.

SARS is also locked in a dispute with KPMG following the audit and accounting firm’s withdrawal of sections of its report into the so-called rogue unit at the receiver of revenue.

Moyane has been under fire for his handling of the probe into suspicious transactions in the bank account of SARS second-in-command Jonas Makwakwa, which were flagged by the Financial Intelligence Centre.

“Tax morality is a crucial component of a healthy democracy. It has taken many years and lots of effort to build the foundation of trust that supports our tax morality. We have seen how quickly citizens’ trust can be eroded by perceptions of poor public governance,” said Gigaba on Wednesday.

Moyane seemed confident SARS would meet the challenge of the revised revenue target. “Let’s give it a chance. We’ll meet our targets,” he said.

“We have put in place the necessary regional revenue management structures to track taxpayer compliance down to granular level and the results are proving to be positive. We are working much smarter with greater intensity to close any revenue gaps and leakages.”

There will be no adjustments to the top four income-tax brackets and below-inflation adjustments of 3.1% to the bottom three brackets. Instead, Gigaba announced a one percentage point increase in value-added tax from April 1.

This is expected to bring in an extra R22.9bn in 2018-19.

Returns from personal income tax have dwindled with the slowing economy. While tax revenue has doubled in the last 10 years, SARS head of revenue and research Randall Carolissen said personal income tax had been the biggest contributor since the financial crisis, but it was beginning to dwindle.

While no other major personal income tax hikes were announced, partner in the tax department of Hogan Lovells, Natalie Napier, said this would not change tax morality.

Head of tax at Norton Rose Fulbright, Andrew Wellsted, said: “With tax being constantly increased and then squandered, there comes a point where people just pay less.”