President Cyril Ramaphosa says the South African Revenue Service (Sars) stands as a credible blueprint for rebuilding institutional capacity in the wake of the state capture era.
Last week, Ramaphosa highlighted efforts to combat the growing illicit economy during a walkabout at the South African Revenue Service (Sars) National Command Centre.
Revenue collection
In the last financial year, Sars achieved the highest revenue collection in the tax authority’s history, collecting R2.3 trillion.
“These revenues collected into the fiscus return to our citizens as lifeblood. Basic services are delivered, social grants are paid out to society’s most vulnerable, public infrastructure is built and maintained, and the machinery of government is kept running,” Ramaphosa said in his weekly newsletter on Monday.
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Nugent Commission
Ramaphosa said Sars is a standard-bearer for a capable state.
“In 2018, I appointed a commission of inquiry into Sars headed by Judge Robert Nugent. When the commission began with its work, Sars was crippled by political interference, leadership purges were commonplace, and specialist enforcement capacity had been substantially dismantled.”
Morale
Ramaphosa said morale at the tax authority was at an all-time low and revenue collection had been significantly weakened.
“Levels of compliance were steadily declining, with both corporate income tax and personal tax collections down.
“Seven years since the Nugent Commission issued its recommendations, nearly all those recommendations have been implemented. Among the key recommendations were restoring capable independent leadership and governance, restoring compliance and enforcement capabilities, modernising systems, and improving efficiency and services to taxpayers,” Ramaphosa said.
The 2018 Nugent Commission report recommended a massive overhaul of Sars following a breakdown in governance, calling for the removal of Commissioner Tom Moyane, a criminal investigation into contracts with Bain & Co, and the restoration of key units like the Large Business Centre.
It emphasised rebuilding leadership, restoring staff morale through reparations, and enhancing institutional independence.
Tax policy
Ramaphosa said the tax authority has achieved a turnaround that has exceeded expectations
“Just five years ago, public trust in Sars stood at 48%. It is now around 75%. Attitudes towards tax compliance also continue to improve.
“Sars played an important role in South Africa’s exit from the Financial Action Task Force (FAFT) grey list and in the sovereign credit ratings upgrade from S&P last year,” Ramaphosa said.
Ramaphosa added that certainty in tax policy and honesty and efficiency in tax administration are key considerations for investors looking to bring their business to the country.
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