SARS woes bode ill for good governance

Johannesburg - President Cyril Ramaphosa’s blistering letter suspending South African Revenue Service (SARS) boss Tom Moyane showed an attempt by the state to salvage the integrity of the key institution that has been plagued by poor governance.

While graft scandals engulfed the public service, SARS had over the last decade emerged as the last bulwark against corruption, as it maintained a reputation of efficiency and impartiality.

But things have changed.  

Moyane’s suspension on Monday marked a turning point in the management of SARS, after prolonged allegations of declining integrity at the institution tasked with tax collection which enables government services.

According to analysts, SARS shenanigans are not only harmful to the service, but could cause reputational damage to the country and erode public confidence in public institutions to act without favour.

“Revenue collection is a critical arm of the state,” said Samantha Ashman of the University of Johannesburg's Department of Economics and Econometrics.

“If SARS is found to be faltering, the entire public service and the country is at risk. Its functions influence confidence in the economy and the public service as a whole,” she said.

SARS governance issues have over the last years played out in the public domain, including allegations of political interference and Gupta tentacles worming their way into the institution.

“SARS is one of the key public institutions whose reputation and governance should be protected from political interference. Its ability to act impartially should be faultless,” said Ashman.

The service's top brass have recently been dragged before Parliament to explain their questionable conduct which threatened SARS's ability to effectively collect revenue without outside interference.

Ramaphosa’s letter to Moyane this week summed up the extent of deteriorating levels of governance at the institution, strongly rejecting his fitness to hold office.

In a scathing letter to the former tax agency head, dated March 19, Ramaphosa told Moyane that developments at the revenue agency under his leadership had resulted in a “deterioration in public confidence in the institution and in public finances being compromised”. 

It was the strongest rebuke of a public service official by the newly-appointed leader.

“Once the process of revenue collection is compromised, the reputational harm caused by erosion of credibility could be difficult to reverse,” Ashman told Fin24.

Moyane’s suspension comes after the revenue service's chief officer for business and individual tax Jonas Makwakwa abruptly resigned on Wednesday under a cloud.

Makwakwa’s resignation followed allegations of inappropriate relationships with businesses rendering services to SARS. The allegations were among many accusations that have dealt a blow to the reputation of the revenue service.

Brian Kantor, chief economist at Investec, welcomed the action taken by government to restore credibility at SARS, and stressed the need for “competent and unbiased” people at the helm of the institution.

“It seems like something is being done to address the challenges that have been experienced at SARS.  It would have been very worrying if nothing was being done to restore confidence,” he said.

“We now have to wait and see what would be outcome of the steps that have been taken.”

As governance squabbles raged at SARS, the former finance minister Malusi Gigaba last month forecast a revenue shortfall of R48.2 billion.

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