President Cyril Ramaphosa on Monday said that as the country forges ahead with efforts to strengthen the capacity of the State and rebuild institutions that were weakened by State capture, there is much to learn from what the South African Revenue Service (Sars) has achieved in a short space of time. 

Like a number of other key institutions, Sars has suffered from State capture, with political meddling, mismanagement and other factors seriously affecting its efficiency.

Ramaphosa explained that this had the direct consequence of not only undermining taxpayer morality, but also loss of business confidence in the organisation.

Last week, Sars said it had collected over R1.5-trillion between April 2021 and March 2022 – a  25% improvement over the previous year and a 15% increase over the last year before the pandemic.

Over the same period, Sars also paid out its highest amount in tax refunds since it was established 25 years ago.

“When State institutions are well-run and efficient, when they demonstrate credibility and fairness in their operations, this contributes to increasing levels of trust in government. Business and investor confidence also improves, encouraging greater investment and economic growth,” noted Ramaphosa.

He said when tax revenue collection systems and their supporting legislation were efficient, uncomplicated and equitable, it incentivised greater compliance.

He explained that current high commodity prices, resulting in increased corporate income tax revenues, had contributed to the latest revenue collection windfall.

What has also played a role are the steps Sars has taken to improve its information technology and other infrastructure, modernise customs, recruit skilled staff, and combat tax avoidance and criminal activity.

BUILDING A CAPABLE STATE

In 2018, Ramaphosa appointed a commission of inquiry into tax administration and governance at SARS chaired by retired Justice Robert Nugent and the commission delivered its final report in the same year. Four years later, Sars has implemented nearly all of the 16 recommendations and 27 sub-recommendations to restore stability to the organisation, he revealed.

“Sars is taking the wind out of the sails of tax dodgers, beneficiaries of the proceeds of crime, and those involved in corrupt activities. It is well-established that ‘the taxman’ is one of the most efficient tools to combat corruption. In cases where an individual’s lifestyle does not match what they declare, Sars has been conducting lifestyle audits. In the last year, Sars has completed lifestyle audits that resulted in the collection of a further R474-million,” Ramaphosa said.