The outgoing acting commissioner of the SA Revenue Service (Sars), Mark Kingon, has expressed his disappointment at having not been appointed permanently to the post.
However, he was quick to add that there was also a huge blessing to his not getting the job.
Speaking to City Press last week shortly after announcing the preliminary revenue collection figures for the tax year ending March 31 2019, Kingon said: “It is a sad but glad moment because I am flabbergasted that I have had this opportunity to do this for a year. It is an extremely stressful but fun job.
“On the one side I have relief and on the other side, yes, I am disappointed because everybody would be disappointed if you ask for something and you don’t get it.
“But I am not giving up and running away. No; in fact, I am more committed,” he said.
Kingon was appointed acting Sars commissioner in March last year, after President Cyril Ramaphosa suspended Tom Moyane.
Ramaphosa went on to fire Moyane in November, on the recommendation of the Nugent commission of inquiry into tax administration and governance by Sars, citing the “reckless mismanagement” which characterised his tenure.
Turning to the intricacies involved in running the tax organisation, Kingon said its compliance model was driven by education, service and enforcement.
He said service and enforcement were like “a carrot and stick”, while education was a shortcoming on Sars’ part as people needed to understand why they were paying tax.
“Enforcement actions are the stick, while the service is the carrot. I don’t think our enforcement has been as effective as it should be because we have seen a volume of cases in our dispute process.
Yes, it is high volume, but the cases are low impact,” he said, adding that there had clearly been a decline over the years in the effectiveness of Sars’ enforcement action.
Kingon said more companies were going into business rescue and an increasing number of employers were failing to pay over pay-as-you-earn (PAYE) tax.
“We getting more and more people unable to pay over the PAYE to us because of cash constraints,” he said, adding that noncompliance was on the rise.
“In other cases, people just say: ‘Stuff you - I don’t want to pay.’ That is driven by a number of things. It could be driven by people’s perception of Sars. It could be driven by the perception of where the money goes and how government spends it, or it could be the result of significant fraud related to fictitious invoices,” he said.
Kingon said that Sars’ relationship with the Tax Ombud had improved since Moyane’s time, when the revenue service was often subjected to heavy criticism from the ombud’s office.
“With regard to the two main issues the ombud’s office has raised – PAYE accounts and disputes – we have gone out of our way to cooperate.”
Sars announced last week that it would set the target of raising R1.422 trillion in revenue for the tax year ending March 2020.
This marks a 10.4% increase in revenue from the R1.288 trillion raised in the tax year ending March 31 2019.
The last time that Sars achieved an annual increase in tax collections of more than 10% was back in the 2014 tax year.
Since then, the agency’s ability to collect revenue has deteriorated markedly.
Kingon expressed uncertainty about whether Sars would be able to reach its target, but added that it was not an impossible task.
“It is reachable. If you look at the debt book, it is over R140 billion. That in itself will make you reach it.
“Of course, it is not all collectable. Increasing collections related to the illicit economy, such as fuel and tobacco, which could amount to R8 billion a year, as well as to alcohol, can also make you reach that,” he said.
During last week’s announcement, Kingon said Sars had re-established the illicit economy unit, which would be investigating tax compliance in the gold, tobacco and fuel industries.
“In response to some of the Nugent commission recommendations, we have also renamed our Internal Fraud Investigations capability to the Anti-Corruption Unit, to enhance the visibility of this unit’s anti-corruption function within the organisation,” he said.
Kingon explained that after facing heavy public criticism over Sars’ IT system, the tax agency was testing a new R220 million e-filing system, which would be up and running by the next tax filing season.
Johnstone Makhubu, the chief financial officer of Sars, said the organisation was owed a tax amount of about R145 billion – made up of R29 billion in disputed debt and R116 billion in undisputed debt.
Also part of the R145 billion, said Makhubu, was a tax debt of R23 billion that was more than 60 months old.
Ismail Momoniat, National Treasury’s deputy director-general: tax and financial sector policy, said Sars would take at least another year to reverse the damage done under Moyane’s catastrophic tenure.
Acknowledging this time frame but going further, Kingon concluded: “We are going to fix Sars. It is going to need about two years to fully fix Sars – but that is just a guess. The past four years were a disaster.”