Finance Minister Pravin Gordhan on Wednesday expressed concern about both a decline in tax revenue and the running of the SA Revenue Service.
He noted in his Budget speech that revenue had lagged behind the economy, leading to a R30 billion shortfall measured against the estimate in his previous national budget.
“The revenue shortfall is mainly in personal income tax, value added tax and customs duties. This reflects slower growth in wages, employment and bonus pay-outs last year, amongst other factors.”
The new forecast was that total tax revenue for 2016/17 would reach R1.144 trillion – an increase of 7 per cent on the previous year.
Gordhan cautioned that an efficient and trusted tax administration had been critical in the post-apartheid economy and that Sars needed to maintain this credibility.
“Sars must continue to develop the skills and capacity needed to enforce legislation and strengthen its efforts to curb tax avoidance and evasion, and address transfer pricing – a component of illicit financial flows.”
“Continued strengthening of the capacity of Sars and enhancing its relationships with taxpayers is vital for our fiscal health. We will continue to call on Judge Davis and the Tax Committee for advice on how best to ensure that Sars remains a robust and effective tax collection agency.”
He told a media briefing shortly before he tabled the budget in the National Assembly that he and Deputy Finance Minister Mcebisi Jonas had held four meetings with Sars officials in recent weeks and that more would follow.
Gordhan, who headed and overhauled the revenue system before his first stint as finance minister, stressed that a reputation took a long time to build but very little time to ruin.
“It can take many years to build a solid institution and a very short time time to mess it up. Overnight somebody can come in and say I am dismantling it.”
He has clashed openly with Sars commissioner Tom Moyane, who has driven a narrative that an illicit intelligence unit was set up within the revenue service on Gordhan’s watch. It has led to a long-running investigation embroiling Gordhan that has come to nothing.
Last year, fraud charges relating to the extension of a contract at Sars while Gordhan was commissioner were brought, but then rapidly shelved. Gordhan has dismissed it all as “political mischief”.
While it is tradition that the Sars commissioner is invited to sit at Gordhan’s flank when he addresses the media ahead of his budget speech, Moyane was again absent on Wednesday.