SARS on its Quarterly Report & Annual Performance Plan

This premium content has been made freely available

Finance Standing Committee

23 August 2016
Chairperson: Mr Y Carrim (ANC)
Share this page:

Meeting Summary

Documents Awaited : SARS Strategic Plan 2016/17 – 2020/21; SARS Annual Performance Plan 2016 - 2017 [email info@pmg.org.za]

The Committee was briefed by the South African Revenue Services (SARS) on its Strategic Plan for 2016/17 – 2020/21, with the SARS Commissioner in attendance. It was noted that SARS had continued to excel on its core mandate and had collected more than R1 trillion for the first time. It had also continued to improve its cost-to-revenue ratio, with R598 705 million collected in 2009/10, compared to the R1. 435 trillion estimated for 2018/19.

A DA Member raised questions about the alleged tension between the Commissioner and the Minister, and President Zuma's involvement in the matter. He also asked if it could be confirmed whether SARS was currently implementing a project referred to as 'Project Lion'; which he had been led to believe could have been an investigation into certain contracts concluded by the current Minister in his capacity as SARS Commissioner. Those contracts related to a company called 'Interfront'. Was there such a project and was such an investigation under way at SARS? The alleged tensions between the Commissioner and the Minister were further explored, and SARS was questioned with regard to the late submission of certain reports. Heckling from an ANC Member took place throughout this interaction.

Members expressed concern about why these matters were being raised at this meeting, and took issue with the DA Member about it. The Senior Parliamentary Legal Advisor was asked to provide guidance as to how to proceed with these questions, referencing the Constitution and parliamentary rules and regulations. The Advocate advised that everyone had the right to speak and ask questions, and only if it was 'un-parliamentary should it be stopped. Some Members felt that a lot of time had been wasted on this interaction while SARS waited patiently to engage with the Committee.

The Member was advised to consult with the Ministry about the various late reports mentioned, and to consult with the Minister directly about the tensions raised. An investigation conducted by the Finance Intelligence Centre into members of SARS was also raised, and it was made known that SARS would not comment on current investigations with regard to individuals and companies.

The Committee heard that SARS had initiated an education campaign to encourage the payment of taxes and to develop an understanding of why and how personal taxation was effected. Members asked why debt collectors were being used, when this method had proved problematic in the past. It was explained that a lack of resources necessitated this method, but mechanisms had been put in place to prevent exploitation and abuse of the taxpayers. Members questioned the workings of the Border Management Agency and asked about plans for its implementation. The need for more females on the SARS team was raised as an important issue.

The Committee was briefed by SARS on its quarterly report for the period April to June 2016.

Meeting report

The South African Revenue Services (SARS): Strategic Plan 2016/17 – 2010/21

Mr Tim Moyane, Commissioner, SARS said that the organisation continued to excel on its core mandate and had collected more than R1 trillion for the first time. It had also continued to improve its cost-to-revenue ratio, with R598 705 million-collected in 2009/10, compared to the R1.435 trillion estimated for 2018/19. SARS claimed to do more with less in the following way:

  • Electronic volumes had increased 12 times;
  • 94% had been processed during the 2015 filing season without intervention;
  • Corporate Income Tax (CIT) assessments had improved 226 times;
  • 55.48% of Value Added Taxes (VATs) processed in 48 hours in 2015, as opposed to 3% in 2006;
  • 94.8% Personal Income Tax (PIT) refunds processed in 72 hours;
  • PAYE IRP5's volume had increased; and
  • There had been a reduction of 71.996 million pieces of paper.

The Commissioner said that 6.05 million declarations had been processed in 2015. Some of the threats had included cybercrime and terrorism, the illicit economy, tax evasion and avoidance, a poorly performing local economy, non-compliance by high net worth (HNW) individuals, labour brokers (LBs) and small, medium and micro enterprises (SMMEs), the reduced budget allocation from Treasury, and unrealistic demands from organised labour.

Discussion
Mr Maynier said that a question had arisen about the alleged tension between the Commissioner and the Minister of Finance. He recalled that at a post-Cabinet briefing on or about 3 March this year, it had been stated that President Zuma would be dealing with this matter personally and putting measures in place to mediate in this conflict. He asked the Commissioner if he had had any meetings with President Zuma or the Minister on this matter, or any joint meetings, and what measures had been put in place to resolve the conflict.

The Commissioner replied that he would humbly request that these questions be referred to the Minister.

Mr Maynier said that his next question related to the reports. The Minister had written to Parliament some time ago, and notified it that the reports would be submitted late. Here it had been reported that the reason for the late submission was that there had been disagreement between the Minister and the Commissioner with regard to the new operating model. He asked the Commissioner if he would confirm that it was correct that the reports had not been submitted because there was a disagreement between himself and the Minister and if that was correct, whether the disagreement focused on the implementation of the operating model. What was that disagreement and how had that disagreement been resolved?

Ms T Tobias (ANC), who had been heckling Mr Maynier during his questioning, declared a point of order.
She said she did not know what was being discussed, because she thought the Strategic Plan and Quarterly Report of SARS was being discussed. Personal questions were being asked of the Commissioner and about matters addressed before in this meeting. Were questions about meetings with the President and the Minister going to be allowed? This question would put the Commissioner in a difficult position. If these questions were going to be allowed, then it necessitated engagement on these issues.

The Chairperson said he could not prevent someone from asking a question unless there was a legislative prohibition, or it encouraged hate speech.

Ms Tobias said that Mr Maynier should ask real questions.

The Chairperson said that he did not know what to do about Mr Maynier, as he had already expressed his views about him. That was why it was always 'Mr Maynier' and not 'David'. There was no collegiality here. Mr Maynier was outrageous in his behaviour, but he had rights and the Chairperson could not prescribe. Advocate Jenkins (Senior Parliamentary Legal Advisor) was here.  He did not make the rules and found many of Mr Maynier's issues actually reprehensible, but he could not stop him from asking them. The tone was contemptuous actually. Under what rule could Mr Maynier's questions be stopped?

Ms Tobias interjected while the Chairperson was speaking and therefore it was unclear what she had said.

The Chairperson said that he could only operate by the rules and could not speak for other Chairpersons.  He was unsure what to do. He addressed Mr Maynier and said that he did not think the first question was appropriate – about meetings with the Minister and the President – as these were not relevant. The second question was relevant, and here he addressed Ms Tobias and said that one could not stop 'them' from asking this question as one could anticipate that 'they' would ask those things.  The Commissioner, as seasoned as he was, was not just a bureaucrat as one could see from his history, and he would have anticipated the second question. He asked Advocate Jenkins for guidance, as some questions should be put to the Minister and not the Commissioner, as the Minister was the ultimate political head of the entity. He had informed the Minister that Mr Maynier was not the Chairperson of this Committee.

Advocate Jenkins said that if it was something 'un-Parliamentary,' then the question could be stopped. If the question was not aimed at the right person, then it could be directed to the right person. However, according to the Constitution, everyone had the right to speak and ask questions.

Mr Maynier said that his third question concerned the SARS rogue unit. It was clear that an investigation was under way into this matter and was out of SARS’ hands, as it was being conducted by the South African Police. He had received a reply to a Parliamentary question last week, which he would like some clarity on. The Commissioner was aware that there were three key reports related to the SARS rogue unit. The question had revealed that the Konyane Report had not been furnished to the National Treasury, which also had no record of the Sekakanye Report and a record of receipt of the KPMG report dated 3 September 2015, but without attachments, which suggested that the final report, which was dated 4 December 2015, did not appear to have been furnished to the National Treasury. Equally, the SARS Advisory Board had no record of a receipt of the Konyane Report or the final KPMG Report. He asked if SARS could confirm that it had furnished the National Treasury with copies of these documents or not, and could it be explained why the National Treasury and the SARS Advisory Board did not have copies of those Reports.

The Commissioner replied that Mr Maynier should consult with the Ministry about the Konyane Report, the Sekakanye Report and the KPMG Report. It was not his business as Commissioner to contradict, as he had to focus on revenue collection. Mr Maynier had to get a true reflection of the state of affairs. The Konyane Report had been done before this Commissioner had joined SARS, while Sekakanye had been done when he had joined SARS, and therefore someone needed to know how and when these were done.

Mr Maynier asked if it could be confirmed whether SARS was currently implementing a project referred to as 'Project Lion'; which he had been led to believe could have been an investigation into certain contracts concluded by the current Minister in his capacity as SARS Commissioner. Those contracts related to a company called 'Interfront'. Was there such a project and was such an investigation under way at SARS?

Mr Maynier asked if there was an investigation conducted by the Finance Intelligence Centre (FIC) into any senior member of the SARS executive team, was that investigation brought to the attention of SARS, and subsequently referred to the SAPS. He asked further if the SARS had any knowledge of an investigation conducted into any one of it executive team.

The Commissioner replied that the SARS would not comment on current investigations with regard to individuals and companies. As for the investigation by the FIC, which was in the public domain, this was something that the Commissioner felt he needed to understand, because if there was an investigation then it had to follow through the processes that were laid down by the law. It was not his duty to comment on these matters.

Mr A Lees (DA) thanked the Commissioner for the presentation. He referred to page 14 of the Annual Performance Plan, where there was reference to an unfavourable perception of poor state delivery. He asked if SARS was now going to get involved in state delivery and corruption, and if so how. How did that fit into its mandate?

The Commissioner replied that the answer to this issue was a categorical 'no'.

Mr Mathebula Hlengani, Chief Officer: Strategy and Communications & Enforcement, SARS, replied that the matter on page 14, where the answer the Commissioner had given was summarily 'no', was whether SARS was taking the responsibility of government departments or not. The answer to that was covered in an elaborate manner in the preface of the risks facing SARS, to the extent that the reference to unfavourable public perception of poor service delivery and corruption related to the education part of the mandate of SARS - SARS as an organisation that was supposed to collect revenue in the instances where it engaged with tax payers and tax payers had a difficulty to pay their dues because they thought their money was not being spent properly. SARS had a responsibility to educate, and to this extent he referred the Committee to the campaigns it did, showing the schools being built and the roads built. This did not interfere with the roles of other departments and government, but attempted to show people what was being done with their money in terms of education and to therefore encourage them to pay their dues.

Mr Lees said on page 15, the Debt Book was referred to. SARS was contracting outside debt collectors to do this. This had been tried before, and they had failed to do the job on two previous occasions.  He asked firstly if this was the case, and if it was, why this strategy was being used. How were these debt collectors being appointed, and what was the remuneration for their services?

Mr Hlengani replied that that SARS appreciated that there had been an attempt to collect the outstanding amounts that constituted the Debt Book. An initiative around using debt collectors had been employed, but had not yielded the necessary results. It would certainly not be responsible of SARS that, because debt collectors had not worked effectively, this outstanding amount should therefore be left alone and not be collected, because that amount was due to the fiscus. What had been looked at was what it was that had not worked in the past in an attempt to collect, using debt collectors. It had been felt that those failures had been mitigated and that the process could be re-engaged within improved areas. Even in this instance, SARS had gone into a pilot mode first. It was crucial that this model allowed for a particular percentage that a company could collect. If the company collected nothing, it did not get paid anything. It was done on a success basis, and what they were paid would be inclusive of VAT. It was important for the Committee to know that the Debt Book was the most difficult thing to collect, hence the employment of the services of debt collectors.

Mr Hlengani said that the reasons for outsourcing related to the age of the book and the collectability of that amount. SARS was squeezed in terms of resources, particularly in respect of personnel. It was for this reason that the debt collection was outsourced. What SARS had done was to ensure that the people from whom debt had to be collected were not harassed by the debt collectors, as had sometimes happened, and it had kept a very tight leash on the debt collectors which due respect to the laws governing this interaction. The debt collector was paid only 4% of the debt that was collected. With regard to the matter on page 15, there had been a mistake, and Mr Lees was thanked for bringing it to the attention of SARS.

Mr Lees said that he had received many queries about refunds not being paid. In the report it was stated that 55.48% of refunds were dealt with in 24 hours.  He asked what the value of this percentage was. He was sure a sum like R500 could be dealt with very quickly, but what about a sum like R20 000?

The Commissioner replied that here he would like the Committee to be of a similar mind. He would not come to this meeting and tell lies. If one believed the Commissioner would give an answer in line with the prescripts of the law, yes, taxpayers all over the world always had complaints. However, it was not out of complete recklessness that refunds had been stopped. Refunds came into play when the process of auditing and assessment had been completed. Once everything had been completed, the money was then released. The issue of VAT refunds was a bigger question than had been expected.

Ms Tobias started heckling again, but it was unclear what she had said.

Mr A Lees said he did not see anything that showed a plan for the introduction of the new Border Management Agency (BMA).   

Mr Hlengani replied that the SARS position on the BMA was very clear in the documentation that National Treasury had presented. It would not be fair for the SARS to present a position on this issue, separate to what the National Treasury had presented. This was a policy matter and however it was decided, it would be SARS' responsibly to implement. 

Mr Lees referred to page 19 of the Annual Performance Plan.  He asked of it was really “Rand million” or “Rand thousand.” 

Mr S Buthelezi (ANC) asked if the Minister had approved the Strategic Plan, and when this was done. He asked further if it had affected the performance of SARS in any way, and if so how.

The Commissioner replied that the Strategic Plan had been submitted to the Ministry on March 7 2016, interactions were had with the Minister on March 16 and March 23. It could be stated with certainty that the Strategic Plan had been submitted on time.  The delays were not within the competence of the Commissioner.

Mr Buthelezi commented on issues of gender equity in SARS, and said that it would be useful to see more women in the team so as to be assured that they existed.

The Commissioner replied that more women would be filling the ranks of the organisation as it proceeded with its mandate.

Mr Buthelezi said that in the previous week, the BMA had been discussed and both the Department of Home Affairs and the National Treasury had been at the meeting. He felt that there seemed to be a disconnect between the departments. He asked how this would affect SARS' performance.

Ms Tobias said that at a meeting in May 2016, looking at the focus of SARS, it had been reflected that the SARS had collected R1 trillion and R69 billion. She asked what SARS ' current focus was, and what the target was that was being projected.

The Commissioner thanked Ms Tobias for the congratulatory note that the 14 000 SARS workers who had worked so hard to achieve the R109.69 trillion. It was a factor of collective leadership and an energised team of employees. The SARS team, including the Commissioner, were visible to all employees in all the provinces.

Ms Tobias asked if there was an upstream projection to allow for changes in focus. She said that there was a suggestion through the BMA that there was a need for a coast guard. The salary levels of the personnel involved should also be looked at. More information was needed about the shifting of some of SARS responsibilities to the Department of Home Affairs, but this could be discussed at another time in the future.

Mr B Topham (DA) said that the SARS' achievements were commendable, but he wanted to issue a caution with regard to contact centres. While they were a strength when it came to more complicated issues, there needed to be an avenue to speak to a real person. There were tax practitioner units, which were a great improvement compared to 10 or 15 years ago, but at that level there was still a basic level of knowledge.  A person with higher knowledge had to be facilitated, like in the old days, when one could speak to an assessor.

The Commissioner thanked Mr Topham for the positive feedback and the commendation. The new operating model was underpinned by the fact that as SARS progressed with the technological upgrade of the organisation, it would be releasing some of the resources which were human in nature. These would be channelled in order to give a face to face interface with the tax payer on complex matters, instead of a telephone or something that was recorded. This was a new road that SARS was taking, as it would be releasing professional skills into an area wherein it has traversed less.

Dr B Khoza (ANC) apologised for being late. She said that before the important points made by Mr Topham were watered down, it was important to congratulate SARS for managing to perform in a very difficult environment. One wanted to find out from SARS whether they had factored in the recent developments that included the fact that South Africa was one of the first signatories with other countries in terms of changing information. She asked if this was factored in under Outcome 2: Increase Tax Compliance. It would be very interesting if the SARS had some figures to share with the Committee regarding this.

Dr Khoza said that when the Committee engaged with SARS about the ‘Panama Expose,' it did not have a sense of how much of it really involved South Africa, except for the sensational reporting from the media. It would be interesting to know how it affected South Africa and the status of this situation.
                                                  
She said that some of the collections of R1 trillion in the last financial year where attributed to outstanding debt, and given the projected 0% economic growth, she asked if SARS would be able to outdo that target. Regardless of what one said, it would eventually impact on one's ability to collect, especially when one had such a bleak economic environment.

The Chairperson said that given that the documents had been received late, he had not had time to read them. He asked for a summary of the Reports.

Ms Antonia Manamela, Parliamentary Researcher, said that the objectives were in line with what had been stipulated. On the risk side, there was an element that was not clear on the issue called ‘Manifest Processing.’ Here there was a call for an increase in border control. Clarity was required as to whether this would be linked the BMA, and if so how.

The Chairperson said that one of the reasons why the Committee had wanted this documentation earlier was so that it could go to the entity where they were, and could then look at it, anticipate and respond to concerns.
 
Ms Manamela said that perhaps they could respond a bit later. There was greater emphasis on skills and up-skilling of people at SARS, so that was quite good. There was an element of the estimate of national estimates in one of the publications by the National Treasury. The issue was really about having the funded posts versus what was reported in the strategic plan. The numbers there did not correspond, so there was inconsistency there. There was a need to understand why there were more numbers, as opposed to what was funded by National Treasury. There was also the issue of the Operating Model. Clarity was needed on what this was about. 

The Commissioner replied that these issues would be responded to in writing.

The Chairperson commended the work done by the Researcher, but it was not fair to expect someone to work so hard. It was just unfortunate that she was overburdened because this information had been received late on Thursday, but the Commission was given seven days to reply. The Researcher's response would be looked at properly and a slot would be found to engage with her. The Committee was grateful for her outputs.

The Chairperson said that the finalisation of the strategic plan was welcomed. It had been communicated to the Minister and the Commissioner that if it had not come now, it would have been very tough. There were questions as to how accurate the SARS' statistics were, but up to now there had been no credible questioning of these statistics. In other words, there were powerful private sector institutions and NGO's, who, if wrong statistics were being given, would have taken issue with the SARS. The figures spoke for themselves, and SARS had therefore done well.

The Commissioner replied that on revenue rating and the accuracy of statistics, he wished to assure the Committee that that which was written here could be put to scrutiny by the industry, the public and tax payers, so there was a need to be up to date and perfect with regard to the statistics derived in law.

The Chairperson said that with regard to the BMA, this issue should be put on the agenda for discussion tomorrow. The Commissioner had made it clear that this issue would cause complications. He was surprised that SARS had been not called upon to speak at this meeting. However, what the SARS and the National Treasury were saying had the same thrust. The outcome of that meeting was inevitable. The SARS was free to speak with this Chairperson outside this meeting if they had any issues, The Committee would like SARS to comment on what it thought the status of the issues were. 

The Chairperson said that the issue of base erosion and profit shifting came up constantly. Where was SARS with regard to this? Where was the capacity? There were four tax bills, two other major bills, and two of them had been lying with the Committee since October last year. The House was now sitting to see how far it could progress with them. It was difficult to take this matter forward. There was concern about this, but it was unknown how to take this forward. Parliament was not coming with a position to set clear deadlines and goals.

This Committee felt that it was not playing its oversight role effectively, and was therefore pleading with SARS, with its resources, to steam ahead.

The Chairperson said that global institutions were saying that even the 0.9% growth that the National Treasury and government were projecting, was not on. Since then, the Reserve Bank had entered 0.4%, and now the World Bank and the IMF were talking about 0%. Despite the lack of growth, SARS had done very well in the last financial year. He asked the SARS anticipated for the forthcoming year, and what sense it had for future developments.

Mr N Kwankwa (UDM) said that the challenge in African countries was that they operating in silos to fight profit shifting and base erosion. A question had been posed to the Commissioner about what had been done at  regional level to ensure co-ordination of efforts, to ensure that it was done properly, because companies could always shift to other countries.

The Commissioner said that from a regional perspective, two meetings had been held with about 14 Commissioner Generals, as they were called on the continent. They had discussed illicit trade, base erosion and profit shifting. The key issue was that countries were resource-based, and the reason for the meeting was to put a plan together on how to share information and learn from each other, and understand where the leakages and gaps were located. In that meeting South Africa was confirmed as the chair and co-ordinator of the next meeting of the Commissioner Generals in Southern Africa. Capacity building and skills transfer were key components for these economies. About 20 men and women were going to be recruited who were specialists in this field, and they would need to understand how and why corporations in this field were transferring their profits into other jurisdictions where taxes were lower, and be able to see and meander through this web that was being created. The Committee should be aware that this matter was not being taken lightly, and would be given all the necessary attention.

The Chairperson said that SARS actually delivered on time, and with quite comprehensive replies.

Ms Tobias follow-up on the Debt Book, and asked about a timeline, because some agencies were unscrupulous and devious. She said that the rolling out of information communication technoIogy (ICT) in the rural areas would provide great advantages, like providing access and training in the ICT arena. It would also remove the perception that rural people had no knowledge of ICT.                      

Mr Lees said he did not feel that the question that he had about how service delivery fitted into SARS' mandate had been answered. He also needed an answer to his question about the decimal point (millions or thousands) on page 19 and he really needed some clarity on this.

Mr Lees said that he felt that a remark made by the gentlemen seated opposite him was unfortunate. He had not said that the option was to do nothing, and he did not think that anyone had implied that either. He had ask what percentage was going to be paid for the debt collection pilot project, and what control was being exercised over the methods used to do these collections, because the 'no-win no-pay' option left it open to all sorts of possibilities to make sure that collections were made. He asked what the percentage was, and why it was so difficult to collect.

Mr Lees addressed the Commissioner and said that he had not implied that there was some kind of misrepresentation on the part of the Commissioner. Perhaps this was something that needed to be looked at from a legislative point of view. It was easy for staff to delay payment because of various audit procedures and requesting documents for months on end, not just days. This did not mean that he (Mr Lees) was saying that the Commissioner was misrepresenting things to the Committee. It was just that in his long history of working with SARS, he had never experienced it as slow as it was now. This so that people who were not fraudulently claiming could get their money more quickly. He apologised if the Commissioner thought that he had implied that he had lied.

Mr Maynier said that he took the Commissioner's point and that when next SARS appeared before the Committee, he felt that the Minister should also appear so that he would then be able to answer some of the questions.

Mr Maynier said he just wanted to put two questions of clarification to the Commissioner, because the Commissioner's earlier reply had frankly been obscure. He he understood the Commissioner not to deny that there was, or is, a project within SARS referred to as Project Lion which related to an investigation into contracts which had been signed some years ago, probably under the jurisdiction of the current Minister and related to the customs management system. He felt that it would serve the public interest, if there was no such investigation, that the Commissioner told the meeting now before this matter exploded.

Mr Maynier that the second question was that he again understood that the Commissioner did not deny that there was an investigation currently under way into the affairs of a senior member of the management team at SARS. Again, if the Commissioner had no such knowledge of such an investigation being conducted either by the FIC or by the police, again it would be useful if he told the meeting now before this matter exploded.

The Chairperson asked Mr Jenkins for guidance on the second question. He felt that the second question could not be asked in this House or in this Committee -- or did Mr Maynier have the right to ask that question?

Advocate Jenkins said that he had the right to ask the question, but the answer might be limited because of a confidentiality issue.

The Chairperson said that therefore the Commissioner did not have to answer that question.

With regard to the first question, the Chairperson said that it was saying that there was a project called Project Lion, into which the Revenue Service Commission was carrying out an investigation into its authenticity.

Ms Tobias interjected, shouting 'how did he know about that? '

Mr Maynier said that he was simply saying that there may be an investigation being conducted into certain contracts related to the Custom Management System, and that that investigation may be referred to as Project Lion. His question to the Commissioner was whether there was such an investigation going on, and if the Commissioner was denying that there was such an investigation. On the other matter, again he just wanted clarity about whether the Commissioner was not answering, or whether he was not denying that there was such an investigation. It would be helpful, if there was no truth to these matters, if the Commissioner told the meeting now.

Ms Tobias was heckling Mr Maynier throughout his input.

The Chairperson said that if the Commissioner wanted to reply, then he would. Members were asked to comment on the first question.

Ms Tobias said that SARS had made a presentation on their strategic plan and their annual performance plan. The responsibility of the Committee was to do oversight. The feeling she was getting that this was more of an interrogation.  This was turning into a kangeroo court. There was a forum for 'politicking,' and this was not the place. She requested that when the Committee was here, it behaved as such. Certain Members were looking for attention, which was uncalled for.

Dr Khoza said that she thought that there was a problem with the title of 'Shadow Minister,' because people took this so far and ended up with having facts that the rest of the Committee did not have.  She was unable to weigh whether there was something worthwhile in what Mr Maynier was saying. or whether it was part of other peoples’ aspirations. What he was saying had a lot of 'may' and 'could be'. She was not saying that Mr Maynier should not raise certain issues, but this meeting should not be subjected to the aspirations of other people that may, or may not, come true.

Ms Tobias said that she had noted Mr Maynier's questions, and felt that they did not belong in this discussion. This meeting was being subjected to information that they did not have. Mr Maynier should have brought the information to the Committee for agreement about whether those questions should be asked of SARS. Some government officials were leaking information to certain individuals, and this information was then being brought in to the meeting through the back door, which was the way Maynier was bringing in the information. If his questions were fair, this Committee would support him. If it was 'whistle blowing', it was honest and he would have been supported. The manner in which Mr Maynier raised his issues limited the integrity of the issues he wanted to raise. The Committee would support issues that were raised with integrity, honesty and in a fair manner.

The Chairperson said that he had explained to Mr Maynier that his attitude did not help matters. There was a limit to what one could achieve with a surfeit of information. He had spoken to Mr Maynier's Chief Whip, who thought that he (Mr Maynier) was the only person who exercised oversight. He was not calling Mr Maynier a racist, but he was bordering on being a neo-racist.

Mr Maynier said that he wanted it on record that he was committed to his Constitutional role, which was to provide oversight and scrutiny. He resented the insinuations that his motives had to do with a right wing ideology or that he was racist, and he hoped the Commissioner accepted this.

The Chairperson said that he had not called Mr Maynier a racist. He said he would not sacrifice the rules of Parliament for anybody. He asked Advocate Jenkins for guidance on this matter.

Advocate Jenkins said that the new ninth edition of the rules retained the general powers of the Committee, which could therefore determine its own working arrangements. It was now in Rule 167, so if the Committee was concerned about time and operating procedures, the Chairperson could guide the questions. That being the case, Members of Parliament did have freedom of speech in the Committees and the Houses, but the rules should be followed. The rules attempted to put substantive motions in one area and questions to Ministers in another area, so that Parliament could carry on with its work.

Mr Kwankwa said that the Committee should meet alone to iron out all the tensions or differences that existed. He had noticed that there was a trend in Parliament for politicians to fight in front of departments who had to account to Committees on issues.  For example, for the past 20 minutes the team from SARS had had to listen to this Committee fighting amongst themselves.

The Chairperson said that firstly, the question was relevant if there was some substance to it, because there was a Project Lion and if it was what Mr Maynier suggested it was, then obviously after it had been processed it had to be brought to the attention of this Committee. If there was something like that, then sooner or later it would be leaked. Secondly, because of the way it had been posed, it implied that Mr Maynier had no evidence. Thirdly, related to point two, he had already put this question and it had been responded to, which was not to Mr Maynier's satisfaction. Taking into account these three things, he would like to suggest that the Commissioner could reply if he wanted to, or he could repeat what he said, or he could say that he had already covered this area. If Mr Maynier came with something more substantial, the Committee could process it the next time SARS appeared here, or through a written question to the Commissioner, so that when he came to Parliament he would know what he needed to reply to, or he could find some other form of raising it.

Advocate Jenkins was asked if anything that had been said transgressed the spirit and text of the law and the rules of Parliament.

Advocate Jenkins replied that not to his knowledge.

Dr Khoza said that just for the record, she wanted to get the Commissioner to respond, because from what Mr Maynier was saying it was as if the  Commissioner was dismissing everything, although it had not come across to her in that way. She did not want to misquote the Commissioner.

Ms Tobias said that Dr Khoza was her friend, so she would not be offended by what she was going to say. She had a limitation about whether Mr Maynier's the question had been asked in good faith, based on the fact that earlier on Mr Maynier had wanted to ask the Commissioner a personal question about his relationship with the Minister. The Commissioner had responded and Mr Maynier was not satisfied. She suggested that the question should not be a surprise one, but that it should come as the Chairperson had suggested in his summary.

Mr Hlengani said that the Commissioner had asked him to respond to the follow-up questions. From an organisational perspective, he reiterated that the SARS could not comment on current investigations, whether they were of individuals or companies, until they were concluded, and it should be left at that.

The Chairperson commended Mr Lees on the pointed, focussed questions which he had asked after close scrutiny of the documents.

Ms Tobias asked for more information about ICT in the rural areas.

Mr Hlengani replied that there was acceptance of the challenges affecting rural areas, to the extent that the issues around ICT could be segmented, and mobile tax units were being deployed to as many areas as was possible. SARS was investigating the use of cell phones.

The Chairperson said that he had forgotten that the SARS Quarterly Report still had to be presented, and this would be done now.

SARS Quarterly Report, April-June 2016.
The Commissioner said that the slides on the Detailed Revenue Collection and Operational Highlights were key to this presentation. In the first quarter of 2016/17, R256.915 billion had been collected, which was lower than the estimate of R4.5 billion. While this was in line with the past year's collection trends, SARS' efforts were geared towards reaching their year-end goal. The trajectory that was set was underpinned by various initiatives that had been set up. The adverse effect of low business and consumer confidence levels were weak employment growth, rising interest rates and tighter credit conditions, all of which contributed to a difficult climate for revenue collection. The major contributions to the shortfall were low VAT collections, lower personal income tax, mainly due to lower pay, and lowere than estimated fuel levies.

Some of operational highlights were:

  • Completed preparation for the PIT filing season;
  • Served 45 690 taxpayers through the SARS branch network and mobile tax units;
  • Received 284 029 calls via the national  call centre, and 96.8% of queries had been resolved at first contact;
  • Successful Pay-As-You-Earn (PAYE) Employer Annual Reconciliation had taken place between 18 April and 31 May 2016; and
  • 2 076 investigative audits had been completed, and R979.5 million collected.

Discussion
Ms Tobias said that it was very interesting that the Company Income Tax (CIT) had been juxtaposed. It showed that it was 1.8% higher. SARS was a very shy organisation, and she could not understand why this was so. It had been performing well and sometimes it needed to speak to the public about its own work and show that sometimes, when more levies were put on CIT than PIT, it was for reasons of wanting to plough funds back to the communities.

Dr Khosa said she shared the same sentiments as Ms Tobias. She asked what the contributing factors were for the higher than expected claims.  Was this something that was expected as a trend?

The Commissioner appreciated the Committee Members' contributions. When the economy was spoken of, it referred to a bouquet of factors. When one saw PIT being at -1%, it was a factor of job losses or contraction of the economy. However, most importantly, when StatsSA and the Reserve Bank released their data, everyone waited with bated breath for fear that the country was going into a recession because in the first quarter it had been -1.2%, and when jobs were lost in industry, it was at the lower end of the spectrum where this was visible. The VAT of 5.5% was a factor of claims made by the sector when the economy was contracting, and household consumption was low. The SARS analytics group that dealt with revenue on a weekly basis had sat down and looked at what needed to be done, and mitigating strategies needed to be implemented and put in place. Fortunately there was a compliant tax community. SARS was not only about collecting, it was doing its own economic analysis.

The Chairperson thanked the Commissioner and his team. He asked Advocate Jenkins if there was any norm or constitutional provision that precluded Members of an opposition party for acknowledging good work by government departments or was there something that ruled that out. After the presentation of the quarterly report and the fact that the opposition, and Mr Maynier in particular, could not raise a question implied that SARS was doing a very good job. This comment elicited some laughter from Members.

He proposed that with regard to the Border Management Agency, the Committee, across party political divides for now, agreed:

  • that the Ministers concerned and their departments should meet and develop a conceptual position;
  • At this stage the Committee had reservations about the current proposal, as everyone had agreed on the need for co-operation and co-ordination about the situation on the border, and it was long overdue;
  • However, there were reservations about the current model and the absence of clarity on where SARS would fit in; and
  • One should avoid the separation as far as was reasonably possible, while bearing in mind the need for co-operation and co-ordination across the board of all government entities.

The meeting was adjourned.

Share this page: