Picture: GALLO IMAGES
Picture: GALLO IMAGES

Finance minister Tito Mboweni has come out in support of the SA Revenue Service (Sars) having an “intrusive” investigating unit.

This is in line with the finding of the Nugent commission of inquiry into tax administration governance at Sars, which found that such a unit was necessary and lawful.

The issue of a Sars investigating unit has been in the spotlight following the controversy over the so-called rogue unit, which has had far reaching ramifications for former Sars commissioner and current public enterprises minister Pravin Gordhan.

In a written reply to a parliamentary question by EFF MP Mbuyiseni Ndlozi, Mboweni said he endorsed the submission made by the Treasury to the Nugent Commission in 2018, which stated that “enforcement powers that are also intrusive are necessary for any tax collection agency”. 

“While most taxpayers seek to comply, there are cases of taxpayers who are less co-operative when declaring income or have a clear incentive to withhold key facts about the nature of income-generating activities of the person or business. In such cases it is necessary for Sars to have intrusive enforcement capacity to deal with such evasion,” the submission said.

Mboweni said he agreed that there was a general requirement for Sars to have an intrusive capacity for a well-functioning revenue-collection authority.

“I am sure the honourable member will also agree that Sars must have significant intrusive powers, not only to deal with taxpayers concealing information on income received, but also to counter illegitimate trades (and financial flows) in commodities such as tobacco, liquor and counterfeit goods,” Mboweni said.

He referred to the finding of the Nugent commission’s that there is “no reason Sars was, and is, not entitled to establish and operate a unit to gather intelligence on the illicit trades, even covertly, within limits”.

The commission noted that such a unit was not unlawful.

“Indeed, Sars must not be a toothless tiger when dealing with tax evasion and illegitimate trades and financial flows,” the minister said.

Public protector Busisiwe Mkhwebane found in July that Gordhan violated the constitution with the establishment of  the “illegal” rogue unit.

The high court granted Gordhan an interdict to suspend Mkhwebane’s remedial action against him in Sars's so-called “rogue unit” report, pending a full judicial review.

Mkhwebane then approached the Constitutional Court arguing that the high court order was “granted erroneously and is bad in law” and that it will “create unbearable conditions for the effective functioning of the public protector”. The matter is due to be heard on Thursday.

ensorl@businesslive.co.za