Questions about SARS 'deliberate' withholding of refunds

Cape Town - The Tax Ombud is not saying that the SA Revenue Service (SARS) is deliberately withholding the payment of tax refunds in order to boost its collection figures, Advocate Eric Mkhawane, CEO of the Office of the Tax Ombud, told Parliament's standing committee on finance on Wednesday.

Mkhawane responded to a question by Derek Hanekom (ANC), who pointed out that it is important to ensure that SARS is fulfilling its mandate. He wanted to know if one could say SARS is deliberately withholding refunds to taxpayers in order to boost its collection figures.

Hanekom said if the estimated R20bn in refunds allegedly being withheld by SARS had to be paid out by the agency, it could cause a "system collapse", since SA already has a budget shortfall of R50bn to deal with.

Yunus Carrim, chair of the committee, added that some SARS officials actually told him something similar regarding refunds.

"We leave it to the committee to draw its own conclusions. Some journalists have already drawn their own conclusions," said Mkhawane. He did, however, site an example where a refund of about R550 000 was paid over by SARS just a few days after the end of the financial year. In his view that is just too much of a coincidence.

Bertha Peace Mabe (ANC), therefore, proposed that public hearings be held so that taxpayers can report incidents where SARS deliberately withheld the payment of refunds. Carrim agreed that it could be something to consider.

Independence

The structural independence of the Office of the Tax Ombud must be addressed, Mkhawane told the committee.

"Independence is the crux of this office and no one should doubt it," Mkhawane told the committee. Furthermore, issues of security and confidentiality are very important too," he emphasised.

"Some people approach us, asking about certain individuals, but we cannot say anything. We must treat all information we have in strict confidence."

Mkhawane explained that the Office of the Tax Ombud is still subject to the SA Revenue Service (SARS) in some ways. He said this is ironical since SARS is actually the subject of scrutiny of the Tax Ombud.

Thandi Tobias (ANC) proposed that the Office of the Tax Ombud should actually be made a Chapter 9 organisation, therefore, established in terms of the Constitution to guard democracy. She was supported in this by Mabe and Carrim, who also felt it was a proposal worth considering.

"The sooner we liberate the Tax Ombud from SARS the better. It is an urgent matter," said Mabe. Carrim, in turn, pointed out that when the issue was raised in the past, it was Treasury that opposed it.

Another challenge of the Office of the Tax Ombud raised by Mkhawane was budgetary constraints.

Furthermore, SARS does not have an updated service charter available for taxpayers to know what type of service they can expect from the revenue agency. In his view, a taxpayer bill of rights is also needed.

The Office of the Tax Ombud is also dependent on SARS for IT services. If a taxpayer wants to lodge a complaint, for instance, it cannot be done online at this point.

Gert van Heerden, a senior legal manager at the Office of the Tax Ombud, said communication with SARS is difficult, because the use of technology has made the agency "a faceless entity".

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