SARS is threatening to sue KPMG and blacklist the company. Picture: Gallo Images
SARS is threatening to sue KPMG and blacklist the company. Picture: Gallo Images

One unique thing about SA is the political views associated with the South African Revenue Service (SARS).

To most South Africans, SARS is more than just a bureaucratic institution. It is a brand, much like a national sports team.

Only in SA do we collectively stress over whether revenue collection will satisfy or exceed revenue targets, similar to sports scores. In fact, I am surprised that the prediction is not part of the local betting games.

At a more serious level, SARS must collect its targets so that the government has sufficient revenue to avoid further borrowing, a further ratings downgrade or even another tax increase.

Today, the SARS sports focus is not so much on "targets" but the key players associated with SARS and with the former SARS commissioner taking centre stage. Once firmly in command, he has now been sentenced to exile with previously defeated SARS personnel coming back with a vengeance. Whatever the outcome, the former commissioner is unlikely to return given that his tenure will expire in September. In the meantime, Mark Kingon remains at the helm, having rightly earned a positive reputation over the years.

In the midst of all this turmoil are two important questions: who will be next and how will this decision be made? While the exact name of "who" is the more fun question, fixing the process of "how" is the more important question as a matter of national policy. In short, we can no longer afford a random process of selection behind closed doors, especially if based on friendships.

The process of selection should be transparent. Indeed, a solid democratic process should require that a person of this nature be confirmed by Parliament after executive decision. This confirmation should not be viewed as a question of personal preference but more a question of satisfying a minimum threshold of qualified suitability.

A second but related point relates to the executive decision-maker. Should the president be deciding the commissioner given that the president is leader of the country or should the finance minister decide? The finance ministry should play a role in the vetting process so as to minimise the potential for conflict as witnessed over the past few years.

More importantly, the minimum criteria for any person to assume the role of commissioner must be re-examined. SARS should not be viewed as a political institution nor should the role be filled based on political connections.

Tax law is one of the most complex areas of law globally.

SARS has more than 14,000 employees and now collects over R1-trillion.

SARS operations are more complex than many business leaders can handle. Therefore, tax experience must be viewed as key, not political profile nor connections.

While many would point to Pravin Gordhan as having led SARS to its success despite the lack of any prior tax experience, I would argue that he is truly a remarkable exception. Not many like him exist and one should note that Gordhan took over at a time when big moves could generate big results. No such moves exist at this stage.

The safer bet is to start by focusing on technocrats who have a big strategic vision as opposed to searching for a visionary who may have technical competence. In the world of tax, and of SARS, the details all too often overwhelm desired broad sweeps. It is mainly the technocratic levers that drive tax administration as opposed to strategic moves, which are more likely to come from the Treasury. A good tax technocrat with strategic vision is most likely to possess a solid understanding of the tax law, audit and various aspects of SARS operations (such as collections and returns).

This experienced technocrat can come from SARS or the private sector. In terms of the government, this person can easily be one who worked through the ranks. In terms of the private sector, this person can come from accounting or law firms as well as tax directorships from nonadvisory companies.

Would this mean Kingon should be considered? Absolutely. His experience and skill speak for themselves. This is also not to say there are others who have an equally impressive level of experience in the South African tax world. The point is that a person with 20 years of diversified tax experience should act as the starting point for this pool of key candidates.

One should remember that the South African system is modelled after the British system. In that system, it is clear that politicians remain largely within political roles. The day-to-day workings of the government are largely left to the public service.

SARS and other government functions should be the same.

Engel is CEO of the South African Institute of Tax Practitioners

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