VAT was hiked to 15% because of mismanagement at SARS – Treasury
The April VAT hike to 15%, which has put pressure on both consumers and producers, can be partly blamed on the South African Revenue Service’s inability to collect taxes under commissioner Tom Moyane.
This is the implication of testimony heard by the Nugent Commission – which is currently probing issues at SARS from the time Moyane took over, to the time of his suspension on grounds of mismanagement.
The commission, chaired by retired judge Robert Nugent, is investigating several allegations against Moyane, while also looking at reasons why the revenue service has failed to collect taxes in line with targets.
Moyane has been accused of abusing his power as commissioner and disrupting workflows at the revenue service. Among the claims is that he shut down vital units needed to ensure tax collection, and restructured the group without proper consultation.
In a startling presentation made by National Treasury, however, it was suggested that the blame for government’s move to hike the country’s VAT rate to 15% could also be attributed to problems at SARS, according to media reports coming from the presentation.
According to EWN, Treasury director-general Dondo Mogajane said that the VAT hike had to be implemented in order for Treasury to raise R25 billion, which would not have been necessary had SARS not been mismanaged to a point that it had a R50 billion shortfall.
The director general said that budgeting was a very carefully managed process, that needs participation from SARS and its commissioner. However, in the last three years there was little to no participation from Moyane.
“This year we had to increase VAT, because there was significantly less revenue than what we needed,” Mogajane said, as quoted by IOL.
Mogajane said there had been a breakdown in the relationship between SARS and Treasury, which ultimately led to the VAT hike.
The lack of participation of SARS in the budgeting process was due to a breakdown in the relationship between Moyane and National Treasury, which became strained during a very public spat between Moyane and then-finance minister Pravin Gordhan.
Loading ...