BIG problem looming for the South African Revenue Service
The South African Revenue Service is about to become a victim of its own success. Here’s what you need to know so you don’t get caught up.
The big problem looming for the South African Revenue Service (SARS) has to do with how well its done collecting revenue. Genuinely, the South African Revenue Service is running out of ways to collect taxes.
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Bernard Mofokeng from Deloitte Africa explained that SARS has been improved its revenue collection so much, according to a Daily Investor report. The big gain has been SARS auto assessments, thanks to its improved IT and AI systems. Similarly, audits are becoming more frequent to increase its compliance rate.
SOUTH AFRICAN REVENUE SERVICE
However, the country still faces a massive tax revenue shortfall of R56.8 billion. What can be done considering all its success in tax collection? Essentially, government expenditure has outpaced revenue collection. State-owned enterprise failures like Transnet, Eskom and South African Airways are making a big dent in tax revenue from corporates (roughly R200 billion lost revenue).
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“It’s difficult for the manufacturing and mining sectors to earn enough revenue to pay more taxes. As a result, this has a deleterious effect towards tax collections and how much SARS can collect. It is also not plausible for the National Treasury to increase taxes, mainly because it’s not the taxpayers’ problem that we’re in this situation,” Mafokeng said.
SARS’ BIG TRUST PROBLEM
Furthermore, civil-action organisation, OUTA, ran a public poll about the South African Revenue Service, reports Business Tech. It found 60% of respondents said their trust in the South African Revenue Service had not increased in the last 12 months.
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“Taxpayers were overwhelmingly critical of SARS as the collector of revenue who hands over funds to what is strongly believed to be a corrupt government. Responders linked the distrust of SARS to government looting, even though, as several responders pointed out, SARS doesn’t control the spending, and the main problem lies with government misspending,” OUTA said.
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Respondents to the OUTA survey called for the following changes from the revenue service:
- Investigations into high-profile people
- Lifestyle audits for politicians.
- Higher taxes for the rich.
- Quicker SARS refunds.
- Improved communication with businesses over registering for VAT, PAYE and UIF.
- SARS to broaden the tax base, including in the taxi industry.
- More accountability on tax spending
- .Laws to explore missing money in foreign countries.
- The introduction of incentives for taxpayers who pay for private security, generating their own power, recycling water and have their own medical cover.
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