Nugent: Keep Commissioner in check, but let SARS watch tax dodgers

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Tom Moyane
Tom Moyane

Chairperson of the commission of inquiry into governance at the South African Revenue Service, Judge Robert Nugent, has told Parliament an inspector general could be an effective reform to hold a SARS Commissioner accountable in future.

He said on Wednesday morning that the tax body’s covert intelligence operation was just about the only scandal at SARS which was lawful.

Nugent came to the standing committee on finance to brief members on the report which emanated from the commission of inquiry last year.

The report from the commission of inquiry ultimately sank former SARS commissioner Tom Moyane, whose latest bid at appealing his removal from SARS at the Constitutional Court ended unsuccessfully.

Nugent did not hold back in laying the blame for scandals that dogged SARS at Moyane’s feet.

He told the committee that much of the existing good governance practice at the tax body was reversed upon Moyane’s arrival.

"Within months of Moyane's arrival, the executive committee was disbanded as SARS's top management structure.

"Within a month or two, the information technology regime was halted. This regime cost billions in tax payers' money," said Nugent.

Communication breakdown

One of the most significant changes Nugent noted in his report was a lack of communication and coordination between SARS as a tax revenue collector and the minister of finance, who is responsible for allocating tax revenues among departments, spheres of government and entities.

"In the past four years there has been little communication between the minister of finance and the SARS commissioner.

"The person collecting the money and the person allocating it should be communicating," Nugent said.

Nugent praised acting SARS Commissioner Mark Kingon for implementing some of the recommendations in the report, but said other reforms would require the authority of a permanent Commissioner.

He mentioned former SARS spokesperson, Adrian Lackay, and the misgivings he registered before leaving the employ of SARS, especially regarding statements SARS made about the so-called "rogue unit". Nugent defended the right of SARS’ covert operations to exist.

'Nothing wrong with covert functions'

"There is nothing wrong with SARS being able to perform covert functions or operations. There is nothing wrong with SARS holding a stakeout of a cigarette factory if there is reason to believe it does not comply with tax," said Nugent.

Nugent recommended an inspector general position designed to investigate internal governance at SARS as a way of ensuring a commissioner's conduct can be probed.

He also said one or multiple independently appointed deputy commissioners, whom the commissioner cannot dismiss, would bolster accountability.

"This must not be a huge body with staff all over the place. This inspector general office must be a lean body that is able to make inquiries. If there were such a person, Mr Lackay could have gone to them," said Nugent.

Nugent told the committee that his recommendations had to strike a balance between protecting the tax agency's autonomy, holding the commissioner accountable, improving SARS's ability to improve tax compliance, and improving synchronisation with the office of the minister of finance.

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