Sars might not be able to collect 40% of outstanding tax

Alongside missing its tax collection target for the year, the SA Revenue Service (Sars) is likely to struggle to collect about 40% of outstanding taxes.

The revenue service’s debt book has risen from R85bn to R143bn in the past three years.

It is “questionable” whether Sars will be able to collect 40%, or R57.2bn, of this that relates largely to disputes or debt that has been outstanding for more than four years, Fabian Murray, acting chief officer for business and individual tax at Sars, said at the Tax Indaba on Monday.

By comparison, this is more than the R50bn revenue shortfall Sars reported in the 2017/2018 tax year.

Sars has been working to restore its credibility as tax morality continues to remain low. The recent Nugent commission of inquiry into governance and administration at Sars heard how 2018’s VAT increase was necessary partly due to the revenue shortfall.

The VAT increase, the first in two decades, has hit the economy and the poor hard.

Acting Sars commissioner Mark Kingon admitted at the indaba that the revenue service had lapsed in recent years.

“The damage done to Sars’s reputation has had a far-reaching impact and will take time to fix,” he said.

Deloitte head of tax management and consulting Nazrien Kader said this was not a credibility issue for the current administration, “but it does reflect how bad the regime was over the last few years”.

Finance minister Nhlanhla Nene also warned that the government was likely to miss its tax collection target following data that showed SA is in a recession for the first time since the global financial crisis.

Sars has set itself the ambitious goal to collect R1.345-trillion in tax revenue in the 2018/2019 year.