“It is critical for government to determine the cause of the tax revenue under-collection in order to enable government to take urgent remedial steps to ensure that SARS is able to meet its revenue targets, as set out in the Medium Term Budget Policy Statement (MTBPS) and Budget,” Minister of Finance Malusi Gigaba said on Tuesday.
Minister Gigaba approached President Jacob Zuma for an urgent establishment of an inquiry into the tax administration and governance of the SARS.
The President acceded to the request.
Minister Gigaba said the inquiry is expected to be constructive and to strengthen the institution further where possible.
“The inquiry will help to assess what factors are responsible for the under-collection of revenue by SARS, and what steps need to be taken to improve performance management systems at SARS to improve its capacity to collect revenue.
“The MTBPS recognised that whilst the economic cycle is the most likely and significant factor driving lower revenue collection, other factors could also be at play, like weakening tax morality and challenges facing tax administration.
“Whatever the reason for such shortfall, the risk of under-collection of revenue impacts directly on the size of the future budget deficits, and the sustainability of the projected debt-to-GDP trend, and directly on our credit rating and growth prospects.”
The details of the commission will be released in due course.
According to National Treasury, Minister Gigaba has informed SARS Commissioner Tom Moyane of this proposed inquiry and he has expressed his support for it as well as the willingness to cooperate.