Edward Kieswetter is frank about the mess he inherited at SARS when he started on May 1 as the commissioner of the tax collection agency, replacing Tom Moyane.
“I have been here for about a month, but it feels like 10 years already,” says Kieswetter, who yanked himself out of retirement to take on the top job at SARS in support of President Cyril Ramaphosa’s Thuma Mina (send me) call.
But when Kieswetter responded to Thuma Mina, which is Ramaphosa’s call for skilled professionals (usually from the private sector) to support the government’s reform efforts after the corrosive State Capture years, he probably didn’t anticipate the herculean task of restoring SARS to its former glory days.
Kieswetter’s first mission when he walked into SARS’ Pretoria headquarters was meeting staff – without his team of executives – to allow people to talk to him honestly about the problems at the tax agency. His mission revealed that people’s spirits and morale are broken.
“Sadly, I have found that many of our staff have lost trust in the leadership… We have created a culture of fear and intimidation. And racial tension is high in the organisation.
“When an IT system brakes, it is easy to fix it. When a policy is wrong, it is easy to fix it. The hardest to fix is the spirits of people,” he says.
Although Kieswetter has his work cut out, he is no stranger to fix-it projects, especially those beset by deep corruption and patronage networks.
In 2018, he served on the board of Transnet, the freight transport state-owned entity that was central to the State Capture project under Jacob Zuma’s presidency. In just a year, Transnet’s board ramped up clean-up efforts by axing executives tainted by corruption, mainly former CEO Siyabonga Gama, and recovered money pillaged through unlawfully awarded tenders.
Kieswetter is mindful that his biggest test will be getting support from his SARS staff, which is critical to successfully mounting any turnaround effort.
Some of his staff members – particularly those in the middle-to-senior management tier – are State Capture denialists and have been loyal to Tom Moyane since he was appointed as SARS commissioner in September 2014.
To recap: Moyane was fired by Ramaphosa in November 2014 after judge Robert Nugent finalised his commission of inquiry into governance failures at SARS. Nugent found that Moyane lacked integrity and crippled the organisation as he, along with consulting firm Bain & Co, restructured SARS’ operating model, weakening the agency in the process.
To SARS staff involved in a fightback campaign and actively doing Moyane’s bidding, Kieswetter has a message: “You must decide where you stand, whether it is on the good or bad side.”
Beyond the commitment of his staff to the SARS new dawn, Kieswetter’s big focus is reversing the cumulative R100-billion hole in revenue collection that was seen during the last four years under Moyane. This resulted in a VAT increase in 2018 for the first time since 1994.
Two months into the new fiscal year, Kieswetter says SARS is still striving to achieve its ambitious revenue collection target of R1.4-trillion for 2019/2020. In 2018/2019, SARS collected R1.28-trillion in 2018/2019, missing its R1.3-trillion target.
SA’s weak economy might be a blight on SARS’ targets because strong revenue collection hinges on macro-economic conditions. Already the economy is under pressure as seen on Tuesday when economic growth for the first quarter of 2019 contracted by 3.2%, the steepest quarterly contraction in a decade.
Kieswetter says it’s not the economy but the quality of voluntary tax compliance and additional tax proposals that will help SARS achieve its revenue target.
The 2019/2020 tax season officially opens on August 1. Meanwhile, taxpayers who are registered for eFiling or SARS’s mobile app can file their income tax returns from 1 July.
SARS is offering some incentives to improve voluntary compliance and morality, which has declined because people refused to submit income tax returns in protest of the looting of taxpayer funds that were meant for SA’s socioeconomic developmental goals.
SARS has raised the tax threshold for returns from R350,000 to R500,000. This means that people earning less than R500,000 per annum don’t have to file returns. However, this applies to individuals who receive income from one employer only, have no other form of income (such as a car allowance, business income or rental income), and individuals who have no additional deductible allowances (such as medical expenses, travel expenses or retirement annuities).
State Capture, illicit economy
Other reform measures will require some heavy lifting and patience.
Experienced individuals who rejected Moyane’s bidding were side-lined through disciplinary proceedings or hounded out of the tax collection agency, resulting in an enormous exodus of technical skills at SARS.
Kieswetter says SARS is reviewing all disciplinary cases since 2014.
“Where we believe that these cases were created or manufactured to support the corrupt intent, we obviously have to address that,” he says, without divulging how many cases are being reviewed.
The review will probably focus on disciplinary action taken against former senior officials including, among others, Ivan Pillay, Peter Richer and Johann Van Loggerenberg, who were all accused of being part of the high-risk investigation unit or so-called “rogue unit”. Nugent later found that investigation was not established unlawfully.
As SA eagerly awaits the prosecution of State Capture architects, SARS is building separate capacity and skills to deal with information flowing from the State Capture inquiry. This capacity within the tax agency will be led by SARS veteran Mark Kingon.
“We are also working closely with organs like the Special Investigating Unit and National Prosecuting Authority to ensure that…those who have been involved in any corrupt activity face the consequences for their actions. We will do so without fear or favour.”
Kieswetter has also set his sights on the illicit economy, which causes losses to the national fiscus. However, he ruled out reviving a unit that targets the illicit economy, mainly tobacco smugglers, that was shut down by his predecessor.
Before Kieswetter began his role as commissioner, SARS issued a request for proposal (tender requirements), seeking a service provider to help it keep tabs on the illicit tobacco trade by tracking cigarettes from manufacturing plants to the points of sale. The deadline for tender submissions was set for June 20.
However, Kieswetter has asked for the deadline to be revised. He wants to apply his mind on whether having a dedicated function for illicit tobacco trade is the best response as opposed to focusing broadly on the illicit economy, which also includes illicit fuel and textile dumping.
“We have commissioned a piece of strategic work internally that will reassess the [illicit economy] phenomena so that we understand it better… When we have decided what our response ought to be, we will then create the capacity to deal with it. That might give birth to a unit. But it will not be resurrecting anything that existed before.” DM
"Last century’s magic is this year’s science." ~ Cherie Priest