First VAT hike in 25 years due to inefficiency
Inquiry told revenue shortfall left tax officials largely untouched and their bonuses increased 41%
The true cost of mismanagement at the SA Revenue Service (Sars) was laid bare on Wednesday as Treasury officials blamed it for the first increase in VAT in a quarter of a century. The one percentage point increase to 15% was the centrepiece of former finance minister Malusi Gigaba’s budget in February as the government scrambled to fill a revenue shortfall of about R50bn. The tax, which is levied on goods and services and does not take into account levels of income, tends to hit the poorest the hardest and stifles growth by depressing consumer spending. Treasury officials also told the commission of inquiry into governance at the tax agency — chaired by retired judge Robert Nugent — that the underperformance had left Sars officials largely untouched. They still saw their bonuses increase 41% in a single year. The inquiry is looking into, among other things, the reasons behind the hole of almost R50bn in revenue collection. Suspended commissioner Tom Moyane has attributed the perform...
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