Axed Sars commissioner Tom Moyane. Picture: ALON SKUY
Axed Sars commissioner Tom Moyane. Picture: ALON SKUY

President Cyril Ramaphosa has said the Constitutional Court case brought by Tom Moyane is now ‘‘moot’’, since he already fired him as SA Revenue Service (Sars) commissioner in a bid to restore faith in the revenue service and prevent further catastrophe for the embattled South African economy.

“If the problems facing Sars are not addressed as a matter of urgency, there is a real risk of a further revenue shortfall in the current financial year, which would likely result in a further ratings downgrading, by international rating agencies, for the country,” Ramaphosa said.

‘‘This would have potentially catastrophic consequences for SA’s fiscal sustainability and must accordingly be avoided at all costs,” the president stated in an affidavit with the Constitutional Court on Friday.

Ramaphosa argues that there is no point to SA’s highest court even agreeing to hear Moyane’s case, which he says has “poor” prospects of success. Moyane is challenging the hearing into his fitness to hold office, and the commission of inquiry into Sars.

The president fired Moyane on Thursday, following the recommendations of retired judge Robert Nugent, who headed the inquiry. 

“The resolution of the problems currently facing Sars requires the installation of effective, credible and permanent leadership and cannot be achieved while charges of serious misconduct hang over the head of the suspended commissioner of Sars, a matter which, in itself, seriously undermines public confidence in the institution,’’ Ramaphosa said in his affidavit. 

Ramaphosa also said it was now apparent that Sars deliberately withheld VAT refunds in a bid to make its tax collection figures look better than they were.

“The large, unanticipated payments for VAT refunds have led to a substantial downward revision in estimated tax revenue for 2018-2019, which, according to the 2018 [medium term budget policy statement], is expected to be R27.4bn below the estimate at the time of the 2018 budget.

‘‘Furthermore, it indicates the revenue shortfalls of the four previous years were worse than reported, as Sars slowed down the payment of VAT refunds in order to artificially inflate the revenue actually collected over the past four years”.

Ramaphosa argued that “national interest requires that these problems be addressed as a matter of urgency”

While Moyane has stated that he is the best Sars commissioner in democratic history, Ramaphosa said in the affidavit to the Constitutional Court that the push for a tax inquiry was driven by significant tax undercollection. 

“Tax revenue was projected to fall short of the 2017 budget estimate by R50.8bn for that fiscal year. This was the largest undercollection since the 2009 recession, and was on top of shortfalls of R7.3bn, R11.3bn and R30.7bn over the previous three years. The total revenue collected by Sars was expected to be over R1-trillion in each of these four years, in line with increases in nominal gross domestic product.

“Failure by Sars to collect all the revenue as initially estimated in the original Budget given the higher spending level, meant that government was forced to borrow more and hence increase its debt, which is a major determinant used by rating agencies when assessing our sovereign investment grade.  

‘‘The weakening of the fiscal position was stated by S&P Global Ratings as one of the factors behind reducing the rating on SA’s long-term local currency rating to ‘BB+’ (commonly referred to as ‘junk’ status) on November 24 2017.”

Moyane maintains that the Nugent inquiry was a “witch hunt” against him, and was tainted by bias.

Ramaphosa, in turn, criticised Moyane for making “argumentative, inflammatory and ultimately irrelevant” allegations against himself, public enterprises minister Pravin Gordhan and multiple other officials involved in those hearings.

Ramaphosa says Moyane’s case, which centres on the former tax boss’s argument that the president violated the constitution in how he treated Moyane, “stands to be dismissed on substantive and procedural grounds”.

The president said “Moyane has failed to make out a case for direct access” to the Constitutional Court, and failed to show that “my decision declining to disestablish or stay one or both inquiries was unlawful, irrational or otherwise inconsistent with the constitution”.

Moyane also argued that Ramaphosa acted irrationally when he refused to fire Prof Michael Katz, who he described as Ramaphosa’s “personal lawyer”, as an adviser for the Nugent inquiry.

The president has rejected this argument, as well as what he says was Moyane’s baseless attempt to stop Gordhan from giving evidence against him. Gordhan was the main witness in the misconduct inquiry into Moyane’s fitness to hold office, the legality of which he is now disputing in the Constitutional Court.

According to Moyane, Ramaphosa unlawfully “abdicated” his powers to make the case for his removal from office to Gordhan, “who is not legally authorised to act as he did in respect of the disciplinary inquiry and who is in any event further disqualified due to his conflict of interests and proximity to the issues as a relatively recent commissioner of Sars and his legendary hostile and disrespectful attitude and conduct towards me”.

Ramaphosa denies this, and maintains that “my expectation was that Mr Moyane would participate fully in both inquiries and take up the opportunity to put his side of the story across on the alleged acts of misconduct and the causes of the systemic failures at Sars”.