National Treasury & SARS 2020/21 Annual Report & Audit Outcomes; with Deputy Minister

Meeting report

The Chairperson welcomed the members of the Committee after the break to focus on local government elections. He welcomed the team from the Auditor-General. He welcomed the National Treasury officials and the officials from SARS. He also welcomed the officials from the Public Benefit Organisation (PBO) and members of the media. He noted that there would be two sessions. The first briefing would be by the Auditor-General on the audit outcomes of National Treasury and its entities. The next item would be a briefing by SARS on its Annual Report. The meeting was officially open.

The Committee Secretariat read the apologies into the record.

The Chairperson said that earlier on he had spoken to an official from Treasury to inform the Minister, the Deputy Minister and the Director-General that senior officials from the Department needed to attend this meeting. This sort of thing should not happen again. The Committee was dealing with important issues and yet no one from senior management was attending the meeting. Where were the line-function DDGs? This meeting was supposed to be attended by the Minister, not to mention the support team from Treasury. An audit outcome is very important for the Department and Parliament because that is how the performance of the Department is assessed. Next time sessions like these should be taken very seriously by the Department. The Committee took exception to what was happening today. The Chairperson stated that he nevertheless wanted to proceed with the meeting and to hear the briefing by the Auditor-General on the audit outcomes of National Treasury and its entities. The Chairperson handed over to the Auditor-General.

Ms Sibongile Lubambo, Corporate Executive: Audit, Auditor-General South Africa, introduced the delegation from the Auditor-General. Senior managers who were directly involved in the audit of these entities were also present at the meeting. She stated that the senior managers would provide more details if the Committee wanted more information. If there were questions that required the senior managers to respond, then they would be available to do so. She noted that the Auditor-General enabled the Committee’s oversight role by sharing with the Committee some of the insights that were gained during the audit. The Committee could then use those insights, together with other information that it had, to engage with the Department and the entities. The Auditor-General was in the meeting to share the insights with the Committee. The Auditor-General hoped that where the Committee needed more clarity on certain areas, she could provide such clarity after the presentation. The Auditor-General would give the presentation and would then answer any questions that the Committee might have.

Briefing by the Auditor-General on audit outcomes of National Treasury and its entities

Ms Madidimalo Singo, Senior Manager, Auditor-General South Africa, briefed the Committee on the audit outcomes of National Treasury and its entities for the financial year end 2020/2021. The presentation included the outcomes of the National Treasury and all the entities falling under the finance portfolio. The presentation covered 16 audits, 15 of which had been completed; one audit was still outstanding at the date of this presentation. The portfolio had seven audits that achieved an unqualified audit opinion with no findings, representing 44% of the audits in the portfolio. These seven auditees were the Financial Sector Conduct Authority (FSCA), the FAIS Ombud, the Pension Funds Adjudicator (PFA), Land Bank Insurance SOC Limited (LBIC), Land Bank Life Insurance SOC Limited (LBLIC) and the Financial Intelligence Centre (FIC).

The presentation highlighted audit outcomes, root causes and recommendations in order to improve audit outcomes for the portfolio. The presentation also noted areas like governance, expenditure management, material irregularities, consequence management, compliance with legislation and the quality of the submitted financial statements. The presentation noted that the entities that managed to maintain their clean audit outcomes had a strong leadership culture, good financial and performance management, and effective governance. The remaining entities within the portfolio should look at the good practices implemented by these entities to improve outcomes. Going forward, the focus on these entities should be to ensure that they not only achieve clean audit outcomes, but also ensure the effective and efficient delivery of services.

Audit outcomes of the finance portfolio over five years

• The overall outcomes improved slightly when compared to the prior year. The number of entities with audit outcomes of financially unqualified with no findings on performance reporting and compliance with legislation also increased from the prior year. The LBLIC and the LBIC improved their audit outcomes from unqualified with findings in the prior year to clean audits in the current year, while the Independent Regulatory Board of Auditors (IRBA) regressed from a clean audit outcome in the prior year to an unqualified audit with compliance findings.

• The audit outcome of the Co-operative BANKS Development Agency (CBDA) improved from qualified to unqualified with findings as the CBDA has addressed material findings on goods and services.

• The Land Bank audit, which was a disclaimer in the prior year, remained outstanding.

• The remaining portfolio still has findings around compliance with legislation and, in some instances, entities have findings in respect of quality of financial and performance reporting.

• With the exception of the Development Bank of Southern Africa (DBSA), the larger entities in the portfolio – National Treasury, the Public Investment Corporation (PIC) and SARS – had been unable to achieve clean outcomes.

Discussion

The Chairperson thanked Ms Singo for presenting the report on National Treasury and its entities. He opened the floor for members to make comments and ask clarity-seeking questions.

Dr D George (DA) thanked the Auditor-General for the presentation. He said it was a pity that neither the Minister nor the Deputy Minster was in the meeting today, despite the MTBPS preparations. This was a very important engagement and the Minister and the Deputy Minister were not present. The Chairperson had indicated that this was problematic. He wanted to add his voice to that concern. He discussed the issues of expenditure management and consequence management. The Auditor-General had said that several of the entities had a problem with that specifically. Obviously, that was not acceptable especially if one looked at Treasury and SARS. SARS was the custodian of the people’s money and therefore a high standard is expected. The same applied to Treasury because it is managing the people’s money. Treasury is responsible for making sure that the people’s money is managed effectively and appropriately. Where problems arise in these entities it is troubling, because it means that the standards are not being met. The people’s money is very scarce and must be used for service delivery and that aspect is not being properly managed. This needs to be addressed. It was not new and had been going on for many, many years, ever since he had joined the Committee in 2008. He wanted to ask the Auditor-General a question and noted that there were no political principals in the meeting. There were serial offenders. It was mentioned that the entities received a substandard audit result because of poor consequence management, which is a serious problem. The Auditor-General noted that the Land Bank was very, very problematic but it was just a symptom of a wider problem. The Auditor-General did its reports and then gave them to the Committee. The Committee would then deliberate on the reports. Then SCOPA looked at these reports in more forensic detail. The Auditor-General had these reports and it happened over and over again. What was the Auditor-General doing in terms of putting pressure on the political principals where this is necessary? If the same result was received, but nothing ever changed, then it was all pointless. That was his key question. He addressed National Treasury. Why was it like this? There should not be substandard outcomes in this situation because the standards should be high. That needed to be responded to. It was not the Auditor-General’s responsibility to fix the problems, but it did give inputs to various entities. Would the problems carry on forever? Or will the Auditor-General actually do something in terms of consequences as well?

Ms P Abraham (ANC) made a few observations. She appreciated the input received from the office of the Auditor-General. She agreed with Dr George about the attendance of this meeting by the Treasury Department. It was quite disappointing. Dr George correctly stated that the questions the Committee wanted to ask could be asked of the Auditor-General but the people who were supposed to be giving answers were in National Treasury. She hoped that after the Auditor-General made its comments, somebody from National Treasury would indulge the Committee. She discussed the issue of consequence management. If there was going to be consequence management, there needed to be some monitoring plan. Was Treasury weak on monitoring? Did Treasury have a plan in that regard? Maybe the Auditor-General could inform the Committee whether in their inquiry they were able to pin that down, or Treasury could assist the Committee in checking whether there was any plan to monitor the entities especially. Her second question addressed the issue of vacancies. It was quite alarming if the unemployment rate was looked at. She noted the unemployment rate of those people who are not adequately educated. But even graduates are unemployed. Why were there so many vacancies in both National Treasury as well as the entities? Were these vacancies budgeted for? If that was the case, then what did that mean in terms of the spending within the Department if budgeted vacancies were not filled? Her last question was about the audit action plan. It might be a weak plan, or it might not be as good as expected, but was it there at all? Did National Treasury have an audit action plan that would indicate that it took auditing seriously?

Ms Lubambo responded to the question from Dr George on consequence management. Dr George had made quite a number of important points. Dr George enquired about what the Auditor-General was doing to put pressure on the entities and political principals. The answer was twofold. The presentation stated that the Auditor-General’s main role was to enable oversight, accountability and governance. The Auditor-General did that by elevating the insights to the different role-players. The Auditor-General requested that those role-players make commitments that would turn the situation around, commitments that would improve the status quo. The Auditor-General engaged on different platforms. It engaged with the accounting officers. By the time it finalised the report, it had already engaged with the accounting officers and received commitments from the accounting officers on what they would do differently going forward. Where time permitted, it also did that with the political leadership. The objective was to share the recommendations and hope that those recommendations were implemented. Sometimes there were challenges of implementation. The Department and the entities could share with the Committee the challenges that they had. One of the instruments that the Auditor-General had was the Public Audit Act (PAA). That instrument helped the Auditor-General to follow through on the process of material irregularity. That was another way of influencing the action from the different entities. The Auditor-General addressed entities through engagement, through recommendations, through influence and, if all of that failed, then there was the enforcement part that came with the material irregularity. That was the process that the Auditor-General started where it raised the material irregularities. The Auditor-General hoped that in instances where it raised them, the accounting officer would respond positively to the issues that it raised. She noted that there was a correction that needed to be made in one of the vacancies that was spoken about. She stated that Ms Singo would respond and then the Auditor-General would hand over to National Treasury to respond.

Ms Singo responded to Ms Abraham’s question on whether there were action plans in place. The Auditor-General’s observation, as it went through the audit process, was that action plans had been implemented by the different entities, including National Treasury. It was important to note that in some instances those action plans needed to be enhanced to ensure that they addressed the root causes of what remained a concern at these institutions. Moving into the new year, it was important to review those action plans that were in place. The entities needed to focus on the root causes leading to the areas of concern. As the entities refined these plans, they needed to make sure that the plans were fit for purpose. The Auditor-General’s recommendation for today was that there needed to be a reflection on whether these action plans were actually effective. To the extent that they were not effective, they needed to be enhanced. She responded to the question related to the vacancies. A correction needed to be made where it was indicated that the post of DDG for Asset Liability Management within National Treasury was vacant. The Auditor-General understood that the position had subsequently been filled. That was a step in the right direction and the Auditor-General commended the Department for making that appointment. When it came to the monitoring plan around other entities, National Treasury did have a plan. The officials from National Treasury that were present could share with the members the progress made against that plan in terms of supporting the other entities within the portfolio to improve the audit outcomes.

The Chairperson asked National Treasury to respond to the questions asked by the members.

Ms Laura Mseme, Chief Director: Strategic Planning, Monitoring and Evaluation, National Treasury, responded to the question by Dr George. Treasury monitored the performance of its entities. It had a specific unit that provided reports to the Minister in respect of the entities. As the Auditor-General indicated, there had been some improvement but there was still much work to be done. Particularly with regard to the entities that were identified by the Auditor-General, specific processes were underway between Treasury and these entities to address these matters. This included, as mentioned by Dr George, the Land Bank, which had additional problems – not only those that had been indicated in the presentation. Processes were underway between Treasury and the entities to address the recurrence of such matters as consequence management. As part of Treasury’s presentation on 16 November, it would reflect in more detail on those processes that were underway between Treasury and the entities for the Committee. She responded to Ms Abraham’s question about whether Treasury had an audit action plan. National Treasury did have an audit action plan, which would be reflected upon on 16 November. Treasury had challenges in terms of the audit, but it had made significant improvements in certain areas. That improvement, in part, was not only due to the fact that Treasury had audit action plans. In its last presentation on the APP, Treasury had committed to setting up a committee that reviewed the actions that need to be taken by each of the audit findings’ owners to ensure that the mitigation plans were implemented. That was a key reason why the repeat audit findings had decreased this financial year, compared to the previous financial year. She noted that there was still much work to be done. She then discussed vacancies. Treasury had filled not only senior positions, but had also recently advertised widely for a host of critical positions that needed to be filled. All those positions were at various stages in the recruitment process, but Treasury expected all of them to be filled within a short period of time. She addressed the reasons why Treasury had vacancies. Some of the vacancies were unfunded because Treasury did not have the budget. Those vacancies had been reviewed. Like all Departments, Treasury had to review its cost structure and its budgeting. Part of that was to reduce its COE budgets. This required Treasury to pause recruitment for a period of time in order to evaluate each of the vacant positions, those that had been vacant for a long time and those that had become vacant during the year, to ensure that the positions it filled were critical to the work that Treasury was doing and also to the delivery of the services that it identified in its new strategy 2020–2025. That process was a continuous process and it was underway. Hence, Treasury had recently advertised up to 65 positions. Treasury would continue to fill those positions as required.

The Chairperson said that he had had a session with the Auditor-General’s team on the previous day. He had requested that the research unit look for the audit reports of previous years especially those about the Integrated Financial Management System (IFMS) and the Land Bank. There had been issues about the IFMS and the Land Bank in the previous audits. The Chairperson did not want the Committee to keep making the same comments, while no progress was made with regard to the two auditees. In 2018, the office of the Auditor-General said that the IFMS in the finance cluster incurred R71 million of fruitless and wasteful expenditure, and R69 million of this related to the Oracle-IFMS contract of National Treasury, where technical support was being paid for when the system was not yet functional. An amount of R67 million was incurred in the 2016/2017 financial year as a result of the Oracle-IFMS contract committee. The Committee required a progress report on this at the next quarterly meeting, especially on the IFMS, and the posts of accountant general, chief procurement officer and chief director of the IFMS at National Treasury. Again in 2019 the issue of the IFMS was picked up by the audit. The Committee noted that the fruitless and wasteful expenditure increased from R71 million in 2017/2018 to R82 million in 2018/2019. The majority of it was caused by National Treasury and SARS, with R65 million of it attributable to the IFMS 2 project. While the Committee noted that all the fruitless and wasteful expenditure had been investigated, or had been referred for investigation, the Committee believed that the consequence management on the IFMS 2 project had been very slow. It had been a whole year since the forensic investigation into the IFMS had been concluded, yet no tangible action seemed to have been taken against anyone. While the Committee acknowledged that due process needed to be followed, National Treasury needed to move swiftly in implementing the recommendations of that forensic investigation report. In line with the advice of the Auditor-General, the Chairperson stated that the Committee will seek a briefing on the findings and recommendations of the forensic report and an update on the steps being taken to hold the responsible service providers and officials to account. These decisions were taken in previous years with regard to the audit of the IFMS. The Chairperson wanted a response from Treasury about what the Committee had resolved upon that there was a forensic investigation and up to today there seemed to be no consequence management. Instead, the Committee was being told that Treasury was extending the contract to 2026 when there were so many problems with the IFMS. Why was Treasury doing that? There was no consequence management and Treasury was extending the contract. The Chairperson asked for the reason for that decision. Was Treasury not taking Parliament seriously? The Chairperson asked for an explanation from National Treasury.

Ms Mseme assured the Chairperson and the Committee that National Treasury took the Committee very seriously. These processes were taken very seriously within Treasury. She responded to the concerns about the IFMS. She requested the Committee’s indulgence. It would form a significant part of Treasury’s presentation that would be given on 16 November, which would include the Minister and the DG, as well as all the DDGs. Treasury would provide the Committee with all the information around the IFMS as well as the reason for extending the contract. She indicated two things to the Chairperson so as to not frustrate the process. One was that Treasury would be reporting on 16 November that consequence management had commenced in respect of the IFMS forensic investigation. Treasury would be giving the Committee details on the consequence management. Second, she indicated that the head of the IFMS and the chief director of the IFMS had been appointed. Treasury would further provide the Committee with information on progress on the IFMS as well as the areas where there were still challenges. Treasury would indicate to the Committee on 16 November what it was doing to address those challenges along with its partners in the IFMS, the DPSA and SITA.

The Chairperson asked if on 16 November Treasury would commit itself to providing a full, detailed report on what it had done since 2018, since this was not a new matter. Treasury would have to explain why Government had spent so much money and yet it could not be shown what the IFMS had yielded so far. Parliament was not happy because it represented the public. In the light of youth unemployment, which was skyrocketing, Government was wastefully spending money, and this is unacceptable. The Committee wanted a full report on the IFMS on 16 November. The Committee would then take it from there. He then addressed the issue of the Land Bank. In 2018 the Committee noted that the entities that had been achieving clean audits had been doing so consistently over the MTSF period, except for the Land Bank and SARS, which regressed from 2015/2016 and 2016/2017 respectively. That was in the 2018 audit report. In the 2020 audit report, the Committee noted further that the negative audit outcomes in some of these institutions had been variously recurring over, at least, the past five reporting years of the 2014–19 MTSF. The Committee urged the Minister of Finance to intervene and to ensure that the audit action plans that were developed in response to the Auditor-General’s findings were implemented across the portfolio. These were the questions that were raised by members now. The Committee had to see those action plans. It was not the first time that this matter was being raised. The report went further to say that the Committee would in the next quarter schedule a briefing by the Minister of Finance on the progress made in the implementation of the audit action plans across the finance portfolio for the 2019/2020 audit outcomes. That briefing will involve the implementation of the audit action plans on National Treasury, the PIC, SARS, the GPAA, the GTAC, the FFC, the Land Bank, the LBLIC and the CBDA. The Committee was concerned that National Treasury and its entities in the critical portfolio of finance were found wanting on compliance with legislation. The matter of compliance legislation was raised again by the Auditor-General. The Committee had previously stated that the finance portfolio should lead by example, as National Treasury was the custodian of financial management and prudence across all the spheres of Government and State-owned companies. It was regrettable that some entities in this portfolio were found to be non-compliant with such basic prescripts as procurement and contract management, such as the CBDA, the FFC, the GTAC, the Land Bank and the LBIC. There was also the issue of expenditure management where entities failed to prevent irregular, fruitless and wasteful expenditure. These entities were National Treasury, the PIC, the CBDA, the FFC, SARS, the GTAC and the GPAA. The Committee noted that across the finance portfolio fruitless and wasteful expenditure increased from R82 million in the previous year to R149 million in 2019/2020, with National Treasury and the Land Bank accounting for most this. The irregular expenditure also increased from R766 million in 2018/2019 to R1.38 billion in 2019/2020, with the Land Bank standing at R769 million, National Treasury at R249 million, and SARS at R331 million contributing to over 90% of the amount. The Committee would follow up on consequence management issues when the Minister presented on the implementation of the audit action plans for the 2019/2020 financial year. The Committee would also seek a presentation on the challenges at the Land Bank and its subsidiary insurance companies. The Committee also required the Ministry to brief it on the possibilities of the Land Bank being turned into a bank that was regulated under the Banks Act. Had National Treasury developed audit action plans for all the entities that were mentioned, including the Department itself? What was Treasury doing about the issue of the Land Bank? The issue of the audit action plans and the Land Bank was not being raised for the first time. The issue had been raised since 2018. How far was Treasury on these issues that were being raised by the Committee?

Ms Mseme said that National Treasury had an audit action plan. Treasury had made a commitment to the Committee in the previous financial year that it had an audit action plan and was ensuring that the action plan was being actively applied throughout the year. In this way Treasury had successfully reduced a number of repeat audit findings, which was a key priority. Treasury had also managed to reduce the total amount of irregular expenditure incurred year on year. The remaining challenges would be discussed on 16 November. Certain areas in Treasury needed to be strengthened. Treasury had started a programme that was starting to bear fruit and Treasury was confident that it would continue to do so during the course of this year. With regard to the other entities, Treasury had a unit that reviewed and ensured performance in those entities. That unit reported directly to the Ministry. When the Minister took part in the proceedings on 16 November, he would address these matters in his introductory remarks as they related to the entities. She discussed the Land Bank and the recurring challenges. This matter would be taken to the Ministry, and the Ministry and Treasury would respond in writing as well as bolster the engagement with the Committee on 16 November.

The Chairperson asked if there were any further questions from the Committee.

Ms Abraham asked if the Committee could obtain, in addition to the information the Committee would get on 16 November, the status of the vacant posts as well as the plans for monitoring that were committed to in this meeting.

The Chairperson said that this was clear to Treasury. The Committee would receive an updated report on the issues raised by Ms Abraham. The Chairperson asked the Committee to move to the next item on the agenda, which was the briefing by SARS on its Annual Report. The Chairperson handed over to Commissioner Kieswetter.

Briefing by SARS on its Annual Report

Commissioner Edward Kieswetter, Director-General: SARS, introduced the delegation from SARS. Commissioner Kieswetter and a number of officials from SARS briefed the Committee on its Annual Report. The presentation provided some context to the difficulties and challenges facing the organisation over the year. It detailed the revenue performance of the organisation and provided a review of its performance. It also provided information on governance, legal and risk management. During the year under review, the organisation went through enormous change, transforming itself into a SMART Modern SARS. The work in rebuilding SARS as an institution, as well as restoring public confidence, was progressing well. The COVID-19 global pandemic had an unprecedented impact. The presentation noted that revenue performance was up by R38 billion. Gross revenue collected was R1 550.3 billion. A total of R300.6 billion of refunds were paid. There was a net revenue collection of R1 249.7 billion. The presentation also addressed the compliance programme, credit balance, debt balance, tax morality and tax compliance.

Context

Economic impact:

• COVID-19 had resulted in a severe contraction of both economic growth as well as tax revenue. The resultant economic shock led to a 7.0% contraction in GDP growth in 2020 after a marginal increase of only 0.2% in 2019.

• The tax-to-GDP ratio in the 2020/2021 fiscal year is estimated to be less than the long-term average of 24.3% due to the contraction in nominal GDP. In contrast, the buoyancy ratio, which is an indication of tax revenue growth in relation to GDP growth, increased from 1.14 in 2019/2020 to an estimated 1.79 in 2020/2021.

• Due to better than expected economic recovery and improved revenue collections, the revenue estimate was upwardly revised by R99.6 billion, resulting in a full year revenue estimate of R1.212 trillion.

Performance highlights

The presentation noted nine strategic objectives:

1: Provide clarity and certainty for taxpayers and traders regarding their obligations.

2: Make it easy for taxpayers and traders to comply with their obligations.

3: Detect taxpayers and traders who do not comply and make non-compliance hard and costly.

4: Develop a high-performing, diverse, agile, engaged and evolved workforce.

5: Increase and expand the use of data within a comprehensive knowledge management framework to ensure integrity, derive insight and improve outcomes.

6: Modernise its systems to provide digital streamlined online services.

7: Demonstrate effective resource stewardship to ensure efficiency and effectiveness in the delivery of quality outcomes and performance excellence.

8: Work with and through stakeholders to improve the tax ecosystem.

9: Build public trust and confidence in the tax administration system.

Discussion

The Chairperson thanked the Commissioner and the entire SARS team for the presentation of the annual report. The Chairperson was informed that the Deputy Minister had joined the meeting. The Chairperson welcomed the Deputy Minister. He noted that in an earlier session the Minister, the Deputy Minister, the DG and the DDGs were not present. The Committee had needed to pause for a bit because only one official was present. As a Committee of Parliament, it did not take kindly to this. The Committee was worried that the Department did not take the briefing by the Auditor-General seriously. The Committee received an apology from the Deputy Minister and the Minister, who were attending a Cabinet meeting, and from the DG, who was preparing for the MTBPS with the whole executive team. The Committee thought that this meeting was equally important and should be attended by senior managers. Later on, two DDGs joined the meeting. The Committee wanted to bring the matter to the Deputy Minister’s attention. Next time the leadership of the Department should make every effort to divide themselves between Parliament and the executive. The Chairperson noted that the Committee was now dealing with the SARS Annual Report. The Committee had dealt with the Auditor-General’s report with the understanding that some of the outstanding questions and comments made by members would be responded to on 16 November when the Department presented its Annual Report. In particular, the issues of audit action plans, the IFMS and the Land Bank were important. The Chairperson handed over to the Deputy Minister to make remarks.

The Deputy Minister of Finance, Dr David Masondo, said that the members of the Department would make themselves available in the following week to deal with the other issues that had been raised by members of the Committee. He apologised for joining the meeting late. He thought that the apologies from the Department had been conveyed to the Committee. The Ministry took the work of the Committee very seriously because this is where the Ministry reports on the work bestowed on them by the people of South Africa. The Committee, as the representative of the people of South Africa, is where the Department receives critical feedback and support. The Department does take Parliament seriously. The Ministry thought that its apologies would be understood with reference to the constraints under which the Ministry operates. It was not a conversation for today, but he thought that it was important for the leader of business and Parliament to have a conversation, to ensure that there is a way to minimise the overstretching of the finance team. There needs to be synergy to ensure that Cabinet Committee meetings and Parliamentary Committee meetings do not take place at the same time. He had indicated that he was going to join this meeting late. He apologised if the Department had given the impression that it did not take the people’s Parliament seriously. That was not the intention. He was not going to say much because the Commissioner had already outlined the Annual Report. It was important to underline that SARS had been working under very difficult conditions, economically. SARS had also tried to build its extractive capacity. SARS was trying its best. He was sure that the Committee would provide feedback on what it thought of the work that SARS was doing under Commissioner Kieswetter. He provided an example of SARS doing its best: SARS had collected R37.5 billion, above the final estimate. Some people would say that it was simply lucky in recovering the money. But without the capacity of the State to extract the revenue, that recovery would not have been possible if it was not for SARS’ capacity to extract revenue from the mining sector. Despite all the challenges that SARS was facing, some of which were a result of COVID, he thought that the team was doing its best. SARS was doing its best to serve the people of South Africa by way of extracting revenue which was important for Government and the State to facilitate development and provide services to the people of South Africa. He paused to received feedback from the Committee and to take questions on what the Commissioner and the team from SARS had presented.

The Chairperson opened the floor for members to make comments and ask questions.

Ms Abraham thanked the Commissioner for the presentation, which was an elaborate presentation. As the Commissioner was presenting, she had thought about an international conference that dealt with the issue of taxation laws. She hoped that the Chairperson would, in the strategy of the National Assembly, raise the issue of attendance of irrelevant Committees in the conference other than the Finance Standing Committee. She discussed the issue of a clean audit. The presenter spoke about achieving a clean status soon. For her, that was not good enough. It was more of a political statement. What was the plan or the specific timeframe that the Commissioner could give the Committee for achieving a clean audit? She raised the issue of the underfunding of R9 million that had been raised as a gap. If this were addressed, would that assist to boost revenue collection? If yes, then why did Treasury not make it possible? She then discussed revenue collection. What was the impact of the sluggish economic growth on SARS’ ability to reach its targets of revenue collection? She commented on the strategic objectives that were raised. She applauded the attention paid to GBV programmes which were practical and aimed at addressing gender equality. She stated that the Committee would like a SARS that addressed the people’s needs beyond what it was currently doing. She noted that there was 76.2% of tax collection. She wanted to know what had been targeted. 76.2% may sound good but was it good enough for SARS? She raised the issue of SMMEs. She had heard that a proposal had already been completed, but when was the Committee going to see the rollout of the programme? She noted that the Commissioner and his team had reported on struggling SMMEs. What was SARS doing to proactively support these companies so that they were able to comply? She heard the Commissioner mentioning the Departments that were working closely with SARS. However, Employment and Labour did not seem to be one of those Departments. In her view, its involvement would assist with the issue of non-payment of UIF funds. The Commissioner had referred to enforcement tools, and she wanted the Commissioner to unpack that. What kind of enforcement remedy would SARS use on those who fail to pay tax?

Ms D Peters (ANC) thanked the Deputy Minister for being part of the meeting, despite coming at the end of the presentations. This was encouraging. She thanked the Commissioner and his team for the elaborate presentation on the work of SARS and what they had been able to achieve over the financial year. She mentioned that she listened to a radio programme on the previous day and one of the presenters asked a very interesting question. The presenter was surprised that SARS was doing things right, while other State-owned companies were not. She asked the Deputy Minister if there were best practices that other SOEs could learn from SARS. The extension of the social relief of distress (SRD) grant was a result of the efficiencies and capacity at SARS to collect above the targeted amount. She congratulated SARS for that. It had helped to ensure that those who were less fortunate were able to get that a special R350 grant per month during the COVID lockdown. The presentation indicated that revenue performance was up by R38 billion. Was this above average revenue collection? In her other role as a member of the Standing Committee on Appropriations, whenever it had public hearings, non-governmental organisations and research bodies were present. COSATU had also been very vocal about the need for an extension of the Basic Income Grant (BIG). She wanted to know from the Deputy Minister and from the Commissioner whether there had not been any additional mandate given to the Tax Commission to investigate whether the BIG in the form it was mooted was feasible. If the work had begun then could the Committee be taken into confidence about how far the work had progressed? Social Security activists believed that there was still more room to tax the rich and the high-income earners to fund the BIG. She wanted to know from the Deputy Minister whether this was feasible. Was there any possibility, investigation or work being done to look at this particular issue? On slides 23 to 25, SARS stated that it wanted to make it easy for taxpayers and traders to comply. What was SARS doing to ensure that the many small businesses owned by foreign nationals were equitably or adequately taxed? It was important for the Committee to know whether the foreign national-owned businesses were banked. If they were banked, were they paying taxes? This question equally went to National Treasury through the Deputy Minister. Did SARS or National Treasury or the Department of Small Business Development have information on the mainly township or small-town business operations? They were mostly in the townships, small towns and the periphery of large towns. It was important for the Committee to have that information. With regard to non-compliance, was there a figure or target that SARS, working together with law enforcement agencies, was able to meet for those traders and taxpayers who were evading tax? She congratulated SARS about the indications on slide 24 that 5.6 million customs declarations were processed, with over 95% processed in under 10 seconds. That was an achievement worth celebrating. She wanted to ensure that in that particular area it was improved upon. On slide 32 it was noted how SARS avoided security breaches. How did the security breaches of the financial institutions, like banks and the Department of Justice, have an impact on SARS? Or were the interlinkages of the systems not compromising the security arrangements of SARS? She thought the presentation was a good one and very enlightening. She was asked an important question by an ordinary member of her constituency, and it was difficult for her to answer the person satisfactorily. Why does SARS destroy illicit goods instead of giving the goods to welfare NGOs or to the poor? For example, clothes, blankets and food. Given the high rates of poverty and food insecurity in communities, why is SARS destroying clothes and other items that could be given to the poor?

Dr George raised the issue of tax morality. The Commissioner had mentioned that questions arose as to whether it was an inability to pay or whether it was a decision not to pay. These questions also had to do with engagement with SARS and the operational efficiency of SARS. Did SARS do any research on how taxpayers feel about what Government does with the tax money that they worked so hard to generate? For example, when Government wastefully spends it or bails out hopelessly failed State-owned enterprises. Do the respondents to the surveys give any insight into how they feel about that? It seemed obvious to him that tax morality may be impacted by people’s perception of what Government actually does with their money or how well Government manages it. The Commissioner mentioned a R9 billion funding deficit. That was a substantial amount of money and it had been mentioned before that there was a deficit. Was SARS saying that it was not able to achieve its mandate without it? Or was this amount needed to fund the changes that SARS wanted to implement? He discussed the audit outcomes and consequence management. SARS is a world-class institution that wants to deliver a superb service and therefore the standards should be very high. National Treasury and SARS should be the examples to others of how to actually do financial management well. Some issues that arose from the audits regarding wasteful spending were mentioned. How did SARS hold the responsible parties to account? Had SARS taken any action against anyone where necessary?

The Chairperson asked SARS to respond to the questions from the members.

Commissioner Kieswetter thanked the members for their acknowledgement and encouragement. The members of his team had worked hard and welcomed the acknowledgement and constructive feedback received from the engagement with the Committee. He discussed the clean audit. Ms Abraham was referring to the comment made by the CFO of SARS. He assured Ms Abraham that it was not a politically motivated statement. It was actually based on the trend that SARS was currently seeing. Most of the irregular and fruitless expenditure that was reported by the Auditor-General related to prior years, as far back as the year 2016. Because of the way it was accounted for, irregular expenditure that was identified in 2016 often took three or four years to be washed out of the system. In 2018/2019 the amount of irregular expenditure that was reported from prior years was R356 million. The following year that amount dropped to R23.6 million. In the year under review, the amount dropped to R13 million. Within the R13 million, only R4.2 million was included as a new transaction that he had to condone. He discussed fruitless expenditure. The amount this year was R11 million but only R2 million was from a new transaction. He was engaging with the Auditor-General and National Treasury about some of the definitions. Some of these definitions were not helpful. He could share examples of where a correct business decision was made, but it nevertheless resulted in fruitless and wasteful expenditure. For example, if a project was initiated three or four years ago and on review SARS concluded that to continue with the project no longer made sense for the business, that project had to be discontinued. This led to wasteful expenditure but it was the correct business decision. The only way to avoid the wasteful expenditure was to continue with the project, while knowing that this made no sense. Government needed to assess these examples. He provided another example. SARS was under pressure to install televisions and DSTV in its large business centre. When the quote was given, certain assumptions were made. While the contractor was onsite some of the cable lengths were longer and the repositioning resulted in the job costing R11 000 more than the original quote, which made sense. In terms of the Treasury regulation SARS would have to go and obtain an additional quote for the additional work. In practice, it made no sense to get another quote when the installer was onsite. It was R11 000 but according to the definition it was irregular expenditure. He stated that the Committee should examine the substantive definition of the things that ended up in audit reports as irregular or wasteful expenditure. The test should be whether it was the right business decision or not. That discussion required a lot of time. He discussed the economy versus tax. Three things were measured in terms of revenue performance. The first was the performance of the revenue result with the estimate that the Minister had given. That was based on a certain set of assumptions, plus the tax policy instruments. When those assumptions changed, the revenue would be expected to change. If it was thought that the economy would be growing at 3% and the economy only grew at 1%, that would have a direct impact. When the economy contracted, a lower revenue was expected as was seen during the initial phase of COVID. The second measure of SARS’ performance was tax to GDP. This was the extent of taxes that were collected in any GDP. In the last two years GDP had not followed any particular long-term trend because of the short-term impact of COVID, which was compounded by an already sluggish economy. That had trended down, which was not necessarily a good thing. It reflected a sluggish economy. The third and most important indicator of performance was tax buoyancy. This was the differential growth between the growth in the economy and the growth in tax collection. There was a tax buoyancy of 1.14 and that had increased to 1.79. A perfect correlation was one. Anything below one meant that SARS was under-collecting or under-extracting for various reasons. Anything above one meant that SARS was collecting at least what the economy was producing. Hence, the 1.79 was a positive result in the last year. Many economic theories sat under that. He just wanted to provide the Committee with a sense of how SARS looked at revenue performance. He assured the Committee that SARS engaged with all the Departments. He had just used the enforcement agencies as an example. SARS has an active relationship with the Minister and the DG of Labour. SARS is integral in the development of new filing using the SARS technology capability. SARS continues to help them as they continue to think through TERS and some other payments. SARS has worked with the Department of Social Development to see how it can help them in terms of data integrity. As the Commissioner of SARS, he was actively involved in FOSAD. He served on the economic cluster and on the justice cluster. SARS’ participation was productive. He then discussed enforcement tools, which ranged from very light, a phone call or a letter, to the seizing or freezing of assets to pursuing prosecution that resulted in jail time. He would ask his team to elaborate on these tools. He responded to Ms Peters’ comments about BIG. SARS had a huge focus on high-wealth individuals. The work done by the Davis Tax Committee indicated that right now the focus should be on improving the efficiency of collections rather than raising the taxes on wealthy people. SARS supported that view. He responded to the registration of foreign-owned businesses. SARS did not differentiate between a foreign-owned business and a locally owned business. SARS continues to work on lowering the burden of compliance and ensuring that they are registered. This was certainly an area in which Government could do significantly better to serve the informal and township economy. That also included the work of SARS and was on SARS’ radar. SARS has appointed an executive to look at the small business economy which heads up the SMME segment. SARS is determined to improve its engagement with small businesses and township economies. He responded to the question about why SARS destroys illicit goods. SARS destroyed illicit goods for three reasons. The first was that it was a deterrent and an enforcement of South Africa’s laws. The second was that these goods were often harmful. Cigarettes were made without adherence to regulations. If people smoked these cigarettes, they might fall ill. If SARS allowed illicit goods into the local economy, this would destroy jobs and condone illicit activity. The destruction of goods is a huge deterrent. Emotionally, SARS did feel like the member when it destroyed clothing or things that may have value. SARS applied the laws and the law required it to do so. He responded to Dr George’s question about whether SARS’ perception surveys included Government spend. SARS did ask these questions and it was clear that people felt Government needed to spend wisely. In a recent survey, 55% of public members surveyed felt that Government spending was not efficient and needed to be addressed. Another question asked was whether Government provided for and responded to the needs of citizens. There was a mixed response, with a high number of citizens feeling that Government did not respond to their needs. He spoke to colleagues in Government publicly and privately because how Government spent its money had a direct impact on the way SARS could do its work. SARS was often criticised and abused when it had to use enforcement strategies. Taxpayers have said to SARS: ‘Why do we have to pay you the taxes when it ends up in either corrupt hands or it is just wasted through inefficient expenditure?’ The quality of Government spend was part of SARS’ compliance culture that it had created. He then discussed the impact of the R9 billion funding shortage. This is a huge area of concern. That was over three years. SARS needed to do a number of things. It needed to significantly improve its skills in the technical areas of transfer pricing, base erosion practices and forensic investigation, amongst others. SARS needed to step up its investment to improve in areas where it has lagged behind. It has lagged behind in customs modernisation. The ports were inefficient. The previous week he had taken the Minister of Finance and the Director-General to Beitbridge. Beitbridge is often in the media. South Africa has lost millions of hours of productivity. It became inhumane and government needs to step up its infrastructure at ports as well as modernise the customs processes. Those were the areas in which the shortage of funding was limiting SARS, as well as in responding to the illicit and criminal economy. Despite the good revenue performance that SARS was reporting, it could deliver so much more if it built a better SARS that was up to the task and could also respond and detect the levels of abuse and corruption that are seen. He agreed with Dr George’s comments on consequence management. From the numbers shared earlier on there was a steady trend of reduction in irregular expenditure and fruitless expenditure. SARS had previously had a problem in its procurement division. It appointed a very experienced chief procurement officer. Some of the employees that were compromised had left the organisation. SARS had issued strong guidance and letters of warning in respect of any area of abuse or even areas where there was negligence. He noted the work of the anti-corruption unit. Increasingly it would dismiss and convict employees who were trying, with criminal intent, to defraud the fiscus. He delegated the rest of the responses to his team.

Ms Doris Dondur, Chairperson of the Audit Committee, SARS, said that the unqualified audit opinion with findings was reflected on page 103 of the report and particularly paragraphs 28 and 29. She assured the Committee that the audit committee had seen an improvement in the internal control environment within SARS. Secondly, and more importantly, was the fact that the appointment of the head of procurement in October 2020 has resulted in a very positive change. That could not have prevented the irregular, fruitless and wasteful expenditure that was incurred during the course of the previous year. The auditor’s conclusion and the detail management report acknowledged that SARS had made significant progress and implemented steps to reduce the occurrence of irregular expenditure. Irregular expenditure had decreased over the last few years. Part of the post-audit implementation plan was that the audit committee also dealt with the implementation of those findings with deadlines, together with progress. On page 49 of the overall message of the Auditor-General, the same was found, which was that compliance with legislation which led to irregular, fruitless and wasteful expenditure was due to unusual or unique circumstances that were prevailing and that would not reoccur under the current leadership of supply chain management. The audit and risk committee is satisfied in its quarterly meetings and follow-ups that SARS is on a good footing. The audit committee is also very robust in its interrogation of those internal control environment structures together with combined assurance and internal audits. The audit committee engages regularly with the Auditor-General to ensure that there is timeous and detailed follow-up on these findings. She assured the Committee that a significant portion of the irregular, fruitless and wasteful expenditure related to prior years and was being actively eradicated and there was no reoccurrence in the current financial year.

Mr Clement Manyaapelo, Head: Specialised Debt Management, SARS, said that SARS always tried to adopt an approach where taxpayers were always seen as willing to cooperate and willing to pay before SARS activated any enforcement tools. In support of strategic objective one, which was to provide clarity to taxpayers, and strategic objective two, which was to make it easy for taxpayers to pay, that was how SARS started with every obligation. However, if these strategies failed then SARS would activate strategic objective three, which was to detect non-compliance and make non-compliance hard and costly. One of the tools that SARS would then activate would be to issue a final demand to the taxpayer. From there SARS may approach any third party that may hold funds or assets belonging to the taxpayer, including banks, employers, spouses or any relatives. SARS would also issue a civil judgment in the court to blacklist the taxpayer and issue a writ of execution to attach any assets that may belong to the taxpayer within the country and outside of the country. SARS may also choose to liquidate the taxpayer where possible. Where SARS believes that a taxpayer is hiding assets it may go into a tax inquiry to hire forensics where possible to identify those assets that had been hidden. SARS has also held people like business rescue practitioners personally liable for the debt where they had been negligent in the running of the business. Letters of breach had been issued to business rescue practitioners where SARS felt that they had not managed the business rescue processes in line with the legislation.

Mr Wayne Broughton, Chief Litigation Officer, SARS, said that there is a host of legislative options that are available to SARS, ranging from enhanced information gathering techniques to forcible recovery of money. It might seem quite radical, but in the international community all tax administrations have this type of power, which is exercised very circumspectly. Each time SARS exercised this power it was very aware that it was a radical power and that the enforcement action is appropriate for the nature of the non-compliance. In the area of tax disputes SARS’ very first option is to resolve the dispute before proceeding to litigation. The vast majority of technical tax disputes are resolved without litigation. SARS is capable of repatriating assets from overseas and SARS is currently busy with a number of matters. The filing of a tax judgment might alert people or alarm people but it is one of the mechanisms that allows SARS to leapfrog actions and be delayed in obtaining money. This is all ameliorated by the exercise of restraints.

Mr Intikhab Shaik, Head: Technology and Delivery Solutions, SARS, responded to the questions on breaches. The integrity of SARS’ systems is essential as they provide confidence of usage for taxpayers. SARS employs a multi-layered approach across the technology topology. This means protecting the front-end devices like laptops, cell phones and iPads, and then the communication layer, like networks, and then finally the back-end application layer. SARS uses propriety and off-the-shelf packages to protect each of these layers. It employs tools such as multifactor authentication and password protection. Cybercriminals are extremely malicious and are constantly changing their tactics. SARS also has a cybersecurity operations centre that studies the latest trends. It looks out for any attempts at security breaches on a 24/7, 365-days a year basis. In deploying its software it also does ‘ethical hacking’ and pre-deployment penetration testing to ensure that its software and hardware mitigate any cyber threats.

Commissioner Kieswetter said that it was a concern when other government agencies were hacked. SARS looked at what it could learn from that. Thankfully none of those hacks had filtered through to SARS yet. SARS remains vigilant because these hackers tended to move faster than it can build demilitarised zones, virtual private networks and other defences. It is a never-ending war that is being fought. He paused to allow the Committee to ask any further questions.

The Chairperson said that the last time the Committee had the public hearings the tobacco industry, as usual, asked what Government was doing to clamp down on cheap imported tobacco or cigarettes. The traders do not pay tax and this defeats the Government’s programme to discourage smoking. Last year saw the rise of the illicit tobacco trade during the COVID lockdown. How far was SARS in implementing the track and trace project to make sure that there was tighter control on the tobacco industry?

Commissioner Kieswetter said that SARS stopped the track and trace project that he had found when he arrived in 2019. It was stopped because it did not respond to managing risk across the entire supply chain. He described it as ‘locking your front door with the most modern safe and then leaving the back door open’. SARS reviewed the overall management of all its supply chains and that would be part of the customs modernisation programme when it was launched. That was an item for future dedicated discussion with this Committee to give it an update on that. SARS was still in a reactive and a defensive mode. SARS had seen significant improvement in the management of that value chain notwithstanding all its weaknesses.

Mr Beyers Theron, Head: Customs - Border Operations, Port Entry and Customs Compliance, SARS, said that SARS had conducted 445 seizures in 2019/2020, with a value of about R103.5 million. This was during the year before COVID. During the COVID year, 2020/2021, with restricted movement of goods and travellers for a period within that year, SARS made 1 150 seizures with a value of R221 million. The SARS approach was a multifaceted approach that included increased focus on the front line, integrated audits across customs tax and excise, and then the illicit economy unit was involved in investigating syndication and schemes. SARS followed a disruptive approach for illicit activities and balanced that with the investigative work that he had mentioned. He discussed the disruptive approach and the work SARS had done over a year and a half. SARS focused on manufacturing compliance. The biggest problem was not necessarily what was smuggled across the border; it was illicit manufacturing occurring within the country. SARS did a lot of work looking at manufacturing compliance. SARS started work on illicit distribution a year and a half ago. SARS went to about 40 shops in the past six months where it detected around R11 million worth of illicit stock. This was stock that was marked for export that ended up in the local economy and that was balanced with blitz operations. SARS often deployed its national rapid response unit to the border areas. SARS did joint operations with SAPS, the SANDF and other agencies in terms of roadblocks within the border areas. It had been quite successful in that area. He then discussed the investigative side. About 13 investigations were in progress. It was noted in the media that a final liquidation order was approved in court for a letter of demand issued to a trader for R19 billion, which was for 8.1 million kilograms of tobacco. It had been moved into South Africa but could not be accounted for. Government also needed to look at how it could reform its border operations by still providing the benefits for trade facilitation but increasing the screening capability to increase the detection rate.

Commissioner Kieswetter said that despite everything SARS was doing it was merely scratching the surface. During lockdown there was a significant proliferation in the sale of illicit cigarettes; these illicit cigarettes have now been embedded as an alternative to the regular brands. People have become used to buying cigarettes at significantly lower prices. Individuals have become brand aware. SARS was fighting a losing battle in this regard. This problem was significantly bigger than just SARS. It was the whole Government’s responsibility to deal with this. The cigarette and tobacco industry is just one area where SARS has significant challenges. SARS would periodically come back and report on the progress it makes in that regard, but it has a long way to go.

The Chairperson asked the members if there were any follow-up questions before the meeting drew to a close, The Chairperson raised the issue of the one-stop border post. In the presentation the Commissioner mentioned that he visited Beitbridge with the Minister. Over the past month trucks have been delayed for many hours at the Beitbridge border post. How far was Government in implementing the concept of one-stop border posts, taking into account that a year or two ago Parliament passed the law in regard to the Border Management Authority (BMA)? He asked the Deputy Minister if there had been progress in this regard. The Chairperson asked the Deputy Minister to respond to this question and the previous questions asked and to make concluding remarks.

Deputy Minister Masondo thanked the Committee Members and thanked the Commissioner and his team for tabling this report to enable SARS to account to South Africans through Parliament. He responded to the question from Ms Peters about whether other Departments should learn from SARS given its performance. SARS was one example of what is meant by capable state institutions, notwithstanding some of the constraints faced by the institution. Many parts of government and the State could learn about how to use technology, for instance. During the site visits to different SARS units and offices throughout the country it was very interesting to observe how SARS units’ workers adhered to work schedules. SARS, at a central level, was able to tell what was going on in each unit. It was able to tell whether an individual employee was doing his work or not and how much time was spent in the workplace. He was not saying that SARS was using that as a disciplinary tool to monitor workers as such, but he found it very interesting how SARS used technology to make sure that workers did what they were supposed to do. He thought it was interesting to measure labour productivity within the public sector. He was sure that many other Departments could learn from SARS. He had seen how some of the technological instruments and tools could be used to increase labour productivity in the public sector. SARS was able to tell centrally if there were challenges in any of the offices. He responded to Ms Peters’ question on the BIG. The question was whether any research was being done on the BIG. Research is being undertaken. National Treasury, Social Development and other stakeholders were part of it. He was sure that at the right time government would announce the results. He did not want to pre-empt what those results would be. He responded to Ms Abraham’s question about the funding of SARS. He said the matter of the funding of SARS should be exhausted through the budget process which would be tabled before the Committee before it was tabled before Parliament. He did not want to discuss that and undermine the budget process. That process allocated SARS R3 billion over three years. The funding of SARS would have to be discussed within that context. He reiterated that it should first be discussed through that process. He was sure that the Commissioner and his team would present their case there. The fiscal situation needed to be kept in mind. Since the global economic crisis, South Africa has been having serious challenges as far as the fiscus is concerned. Everyone in Government is affected. SARS is an investment centre and it is important to invest. As those investments are made, the resource constraints need to be taken into account. He noted that the BMA had been put in place. The Minister of Home Affairs also appointed a new Commissioner to make sure that what the BMA did was in line with what the Chairperson had basically said. At some point they did need to appear before the Committee to present their strategy and their plans. Then Parliament and the Committee could interrogate the plan and whether it made sense or not. He thanked the Chairperson for giving SARS this opportunity to report on the work it had done, which was contained in the Annual Report. He thanked the Committee for the continuous and critical feedback and support that was provided to SARS, the Ministry and the Executive in order to ensure the people of South Africa are served better. He also thanked the Commissioner and his team for tabling the report. The Department would appear before the Committee next week to table the National Treasury report. The Department undertook to return with answers to some of the questions that had been asked.

The Chairperson thanked the Deputy Minister and said that the Committee would meet again with the Department on 16 November. Various issues needed to be attended to at the meeting on 16 November. The Chairperson raised the issue of the Land Bank. This matter had been with the Committee since 2018, and had to be addressed. The issue of the IFMS has been raised year after year by the audit outcome, and must be addressed. Assurances were given that when the Committee met with National Treasury it would report on how far it was with dealing with the issues of the IFMS in terms of consequence management and other recommendations of the forensic report. He raised the issue of auditees struggling with compliance when it came to legislation. This also had to be addressed. He hoped that the Committee would be given an update as to how far the Department was with dealing with auditees that were struggling with legislation compliance. He noted that for quite some time the issue of ineffective audit action plans had been raised. At some stage National Treasury undertook to present audit action plans for Treasury itself and for the entities. This was very important as it had been raised by the Auditor-General. Government could not be seen to be ignoring the recommendations of the Auditor-General. Those recommendations were actually binding. He thanked the Commissioner and team from SARS for the presentation of the Annual Report. He acknowledged the improved performance of SARS under difficult economic conditions where the country was struggling with the COVID pandemic and rising unemployment. As a result of rising unemployment, the category of personal income tax, one of the biggest contributors of revenue, was suffering. The Committee acknowledged the improved performance of SARS. The Chairperson thanked the Deputy Minister, the officials from Treasury, SARS, the media, the PBO, the SCOF team and the members who attended this meeting despite many other competing commitments.

The meeting was adjourned.