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SARS taken to task by the Tax Ombud

31 October 2017Jonathan Faurie

With the establishment of the Tax Ombud in 2013, South Africa took another big step in enhancing the reputation of the country’s progressive democracy. Since then, the Ombud, headed up by former Chief Justice Judge Bernard Ngoepe, has given the public a progressive platform where complaints and queries relating to tax issues can be raised in a fair and equitable manner.

At the recent launch of the Ombud’s 2016/17 Annual Report, Judge Ngoepe pointed out that the public is starting to find value in the Ombud’s office.

The recent numbers

According to the annual report, the Ombud received 3 454 complaints related to issues such as delayed refund payments, the failure to link submitted documentation requested by the South African Revenue Services (SARS) to the main file, and using the filing of new returns as an excuse to block refunds.

“In all the cases involving SARS, we have asked them to send us a response explaining why the issue is in fact taking place. To date, SARS has been very gracious and have supplied us with appropriate responses. They have also been very open to our recommendations into the steps that we think can resolve the issue,” said Judge Ngoepe.

Delays with tax refunds

One of the major issues we had to deal with in this financial year was delays in tax refund payments by SARS.

For the past three years, the Office has consistently been flagging this problem as an emerging systemic issue.

In 2016/17, there was a further escalation in complaints by taxpayers and industry bodies about SARS allegedly withholding tax refunds. It was even alleged that SARS was doing this in order to boost revenue collection to meet its targets.

“In response to the many complaints received, I wrote a letter to the Minister of Finance (who was Pravin Gordhan at the time), in line with the requirements of section 16(1)(b) of the Tax Administration Act, requesting approval to investigate. The Minister granted approval. The investigation, which has not been a small task, commenced towards the end of March 2017 and was concluded in August 2017. A final report has just been signed and given to the Minister and the Commissioner of SARS,” said Judge Ngoepe.

A detailed article on the report can be accessed here.

Need for services

While the Office has not experienced growth in personnel and budget compared to the 2015/16 financial year, demand for the Ombud’s services has increased.

“This shows that more and more taxpayers are confident of our ability to help resolve their tax complaints against SARS. As more stakeholders and the public become aware of our existence and the much-needed services we provide, there is bound to be an increase in the number of complaints we receive,” said Judge Ngoepe. 

He added that ideally, the Ombud would like to have a footprint throughout South Africa, but due to the economic challenges facing the country, the office is compelled to make do with what Treasury has given it.

Tax usage

One of the biggest issues in South Africa is the apparent misuse of tax payer’s money by municipalities. This issue has increased in significance over the past few years.

“A growing number of taxpayers, and the public to a large extent, are becoming increasingly vocal about the way revenue is being used, or even abused, by those entrusted with its management. We all know that taxpayers need to be motivated to pay tax. Whether they do so or not depends on several factors, including the trustworthiness of tax agencies and representatives of the tax administration system, government corruption, procedural justice or the lack thereof,” said Judge Ngoepe.

He added that another important issue is the perceived value gained using public funds. “I believe that most people accept that they should pay tax, but challenges may arise regarding the extent to which they are prepared to pay what is actually due. It has been argued, and I think correctly so, that one of the sources of a positive disposition on the part of taxpayers is the force of good ethics,” Judge Ngoepe concluded.

Editor’s Thoughts:
Perhaps one of the more pragmatic voices coming from the various Ombudsmen in the country, Judge Ngoepe does not hold back when painting the pictures of the challenges that the country faces. Hopefully the Tax Ombud can have fruitful engagements with National Treasury on how tax revenue is used. This may, in future, grow the tax base beyond expectations and thereby facilitate economic growth. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts


Added by Peter, 31 Oct 2017
There appears to be a significant body of evidence that suggests our president and the Guptas are not paying tax based on the same rules as the rest of us, but are consuming far more of the tax than anyone. IF, as I suspect, this is correct, it is reasonable to expect tax morality in the country to deteriorate rather quickly. As this happens, tax collections will decline and it will become is necessary to increase taxes again, with no improvement services, as so the downward spiral accelerates. We need people who understand "Real" economics in charge and are there for the benefit of the country, not themselves.
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Added by Paul, 31 Oct 2017
If its not bolted down and under 24 hr guard,these guys in Government and all its structures, steal,mismanage or corrupt everything in this country.
I rest my case.
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