Finance minister Tito Mboweni. Picture: RUVAN BOSHOFF
Finance minister Tito Mboweni. Picture: RUVAN BOSHOFF

The SA Revenue Service (Sars) will finalise its research to quantify the size of the illicit economy within the next few months as it moves to tackle the scourge.

Conservative estimates suggest that SA loses R1-trillion a year or 20% of GDP to the illicit economy. This ranges from the underground economy, which operates outside of the rules and regulations of the country, to organised crime.

The main culprits are tobacco smuggling, counterfeit textiles, drug manufacturing and smuggling, illicit mining of gold and diamonds, ivory smuggling and the poaching of endangered species like abalone and rhino.

Finance minister Tito Mboweni said in a reply to a question in parliament on Monday that the research to quantify the size of the illicit economy began in November 2018 and is expected to be completed by March 2020.

“The study also seeks to identify, quantify illicit/illegal activities taking place in both the formal and informal economy. The study will further involve identifying, locating, understanding, registering, managing and monitoring illicit businesses in their different forms and sizes in the illicit economy,” said Mboweni.

He said that there is an interim unit in place within Sars tasked with tackling the illicit economy. Sars’s previous unit — the so-called rogue unit — was controversial and provided disgraced former Sars commissioner Tom Moyane with ammunition to pursue his opponents, including former finance minister Pravin Gordhan and former top Sars executives.

“In line with the overall Sars strategy of discouraging non-compliance and incentivizing good behaviour through education and/or enforcement action as executed by its enforcement  divisions, and in recognition of the need for alternative enforcement responses to non-compliance within the illicit economy, Sars established an interim capability to conduct investigations into the illicit economy,” said Mboweni.

“The capability executes integrated enforcement investigations and comprises of multi-disciplinary and collaborative investigations and enforcement debt recovery actions, supported by legal experts and data analytics.

“The tax and customs legislation administered by the commissioner for Sars (for example, the Tax Administration Act, 2011) governs the conduct of all units within Sars,” Mboweni said.