OBITUARY: Sars was Gordhan’s greatest legacy

“The expansion of the SA economy will raise state revenues by expanding the tax base, rather than by permanently raising tax rates ... improved and reformed tax systems will collect more tax without having to raise tax levels.” 

These were seemingly innocuous lines in the Reconstruction & Development Programme (RDP) White Paper of 1996. Yet they were so pregnant with meaning and hope that it wouldn’t have been rude to think they were just wishful thinking or foolhardiness.

At the time of their writing, SA was collecting a little more than R100bn in tax revenues. Fully four-fifths of that amount went to two items: education and repayments on government debt. The fiscal deficit was nearly a 10th of the national income and seemed likely to grow further. 

Beyond these numbers lay the persistent, glaring inequalities that the apartheid system had bequeathed to our foundling democracy. South Africans who had endured decades, nay, centuries, of dispossession, oppression and penury would be forgiven for their impatience. Yet here in black print the new government committed itself to reining in profligacy in government spending, funding an expanded welfare system and reducing debt through its own means. 

The unstated goal was to set SA apart from other newly founded democracies that sprouted on the African continent after independence from colonial powers. These putative governments would soon be begging their former colonial masters for loans, putting them in a debt trap that strangled their independence in its cradle. This would later be modified into the structural adjustment programmes of the IMF and the World Bank, which corroded the state, impoverished the people and didn’t yield the results they promised. The same was true for many Latin American countries at the time.

To set out on so bold an adventure, what ship would we sail, you may ask. On a wing and prayer, the cynic might have replied. 

Not Pravin Gordhan. He answered: this is our higher purpose — our ideal, to which we always strive. If there is something that distinguished the man it was that he tried his damnedest to do the right thing. It is a tribute to the stoicism of the generation that spent years in hiding, in jails, in exile, that they understood at that perilous moment that freedom comes not from a cathartic rupture with the past beyond which lay a sunny land of milk and honey. Rather, it is a daily chore of tending to the minutiae of the proper administration of the state. 

It is to this task that Gordhan would devote himself without parallel in the annals of government. By the end of his tenure, the SA Revenue Service (Sars) was foremost among similar institutions in the world. Its administrative systems were more modern than those of private banks in the country and beyond. It enjoyed the trust of the public, who wished that its successes could be replicated in the rest of the government. For a brief moment, before the financial crisis of 2008, SA enjoyed a budget surplus. 

This did not happen automatically and I daresay it wouldn’t have been accomplished under any leadership other than Gordhan’s. “Walk the floor”, he’d often growl (he growled and scowled a lot). This meant Sars officials at the head office should never rely solely on desktop analysis but must go and observe the work being done in revenue offices, back rooms for registration, processing, auditing and assessment.

He’d prowl the same nooks and crannies, noting along the way the deficient amount of lighting for workers and taxpayers alike. 

One of his first decisions was that every Sars office should have as much light as a bank branch office. This would change the public’s experience of the government, he said.

The cardinal rule of tax administration is to encourage voluntary compliance with tax law and enforce it only against the obdurate and the recalcitrant delinquents. To this end, tax agencies around the world have developed a model for such compliance that consists of providing a service that makes it easy for taxpayers to comply and enforces the law strictly against those who don’t. Gordhan adopted this model but supplemented it with a third element: education. He understood that, given SA’s history, taxpayers had to be taught about their rights and obligations under tax law.

This was no rhetorical commitment. Rather, it led directly to the fundamental restructuring of Sars. For more than a decade every back-office (registration, processing and so on) that could be automated was and more people were trained to fully serve and educate the public at Sars and at their workplaces. The automation freed officials from the drudgery of manual processing, gave them an enormous amount of information to act on and let them improve their professional skills.

Coupled with an impartial enforcement of the law, this approach endeared Sars to the public.

All tax agencies make enemies for the simple reason that paying taxes makes you poorer than you could have been. This is true all over the world. This antipathy only becomes potent when politicians join in on the side of the tax evaders to attack the agency. 

Sars’ success curdled into resentment that was given political force under Jacob Zuma — an incorrigibly corrupt man for whom state institutions existed only to satiate his appetites, to feather the beds of his family, friends and acolytes, and for self-aggrandisement. He laid a wreckful siege on Sars, alleging all manner of espionage through spurious stories about a “rogue unit” operating beyond the confines of the law, driving honest senior officials (more than 200) and professionals out of the institution. Those who remained started outsourcing Sars’ basic functions — tax debt collections, tracking and monitoring of illicit tobacco products, VAT refunds and so on, which only Sars had the competence to perform. 

Of course, Zuma attempted to extend his rampage through all the financial institutions of the state, including the National Treasury and the Reserve Bank. At each turn, Gordhan took the fight to Zuma and by doing so stalled and helped thwart what would have been a wholesale plunder of SA. 

Among the guises in which Gordhan served SA — the activist at the crucible of the civic movement that would mobilise in defiance of apartheid, the underground operative, the constitutional negotiator and drafter — it is his legacy at Sars that will look on tempests and never be shaken. 

*It would be a disservice to Sars staff not to gripe about one habit that annoyed just about everyone who worked for him. He would hand out the same task to several different people so as to maximise the amount of information he’d get. This led to quite a bit of friction among staff. PG, if you can hear me now, we solved it by comparing notes behind your back. 

• Pillay is a former deputy commissioner at Sars and Pikie is a former assistant to the Sars commissioner.