The South African Revenue Service has collected a record R2,3 trillion in the last financial year, the highest revenue collection in the tax authority’s history, President Cyril Ramaphosa announced following his visit to the SARS National Command Centre in Tshwane last week.
In a speech yesterday he commended SARS staff and leadership for their outstanding work, describing the organisation as a standard bearer for a capable state and a trailblazer in using technology to create a citizen-friendly ecosystem for taxpayers.
Dramatic turnaround from state-capture era
He said the achievement marks a remarkable turnaround for SARS, which was severely damaged during the state capture period. In 2018 Ramaphosa appointed the Nugent Commission of Inquiry into SARS to investigate the extent of the damage and recommend reforms.
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When it began its work SARS was crippled by political interference, leadership purges were commonplace and specialist enforcement capacity had been substantially dismantled. Morale was at an all-time low and revenue collection had been significantly weakened, with both corporate income tax and personal tax collections declining, the President pointed out.
“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.”
Public trust rebounds
The transformation has been reflected in dramatically-improved public confidence. Public trust in SARS has increased from 48% five years ago to around 75% currently, while attitudes towards tax compliance continue to improve, Ramaphosa said.
“SARS also played an important role in South Africa’s exit from the Financial Action Task Force grey list and contributed to the sovereign credit ratings upgrade from S&P last year.”
Model for institutional rebuilding
Ramaphosa highlighted SARS as a blueprint for rebuilding institutional capacity, noting that certainty in tax policy and efficiency in tax administration are key considerations for investors. The organisation is now regarded as one of the best tax authorities in the world. The revenue is used for basic services, social grants, public infrastructure development and maintenance, and keeping the machinery of government operational.
“The rebuilding of SARS illustrates the value of commissions of inquiry,” said the President. “Not only did the commission unearth the full architecture of wrongdoing, but it proposed steps to ensure that there is no recurrence. Credit must go to the leadership and staff of SARS for implementing the recommendations with diligence.”
