Business Maverick
Sars boss, National Treasury in talks on tax breaks if you generate your own energy
Sars Commissioner Edward Kieswetter says the majority of South Africans are 'gatvol' and ‘quite rightly so, with the current state of affairs, the lack of delivery, the slow progress that has been made and particularly, most in-your-face today, the inordinate disruption to social and economic activity brought by load shedding'. And it will probably mean lower tax income for government.
“It’s absolutely a fact that load shedding has a huge impact on economic activities and has crippled many companies. Before recent articles about small businesses not being able to cope, larger businesses made similar announcements so we expect it to have a material impact on our ability to collect revenue. Secondly, we also find that during times of crisis, people are more likely to be ultra-conservative and where there is an opportunity to take the opportunity to withhold paying taxes, so our [Sars] debt book grows considerably,” he says.
Kieswetter was not pulling punches in a frank discussion with journalist Alishia Seckham at a PSG Think Big webinar yesterday.
In the last year, Sars had to resolve 2.2-million cases requiring follow-ups in the form of a phone call, a message and/or a letter and Kieswetter says tireless work by Sars officials in this regard netted almost R60-billion in tax revenue.
New provisions needed to address energy crisis
On the subject of potential tax rebates and incentives to help South Africans deal with the energy crisis, Kieswetter offered his opinion as both a South African citizen and the Sars commissioner. He points out that the last tax amendment in respect of renewable energy was made in 2016 when the accelerated depreciation allowance on renewable energy was amended from three years (50% – 30% – 20%) to an even quicker depreciation allowance of 100% over one year. This effectively translates to a 28% discount on companies’ investment in renewable energy resources.
“I believe that when that was introduced, we would not have been as consciously aware of the extent to which the energy crisis would regress and what other instruments we need to respond to it. I have already engaged my colleagues (National Treasury) to say we should be reviewing what additional provisions we can make to provide some relief and some incentive for people to become more self-sufficient,” he says.
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Retailer Pick n Pay revealed this morning that it is spending around R60-million a month on diesel costs, depending on the stage of rolling blackouts. The retailer spent R346-million on diesel to run generators at stores in the first 10 months of the current financial year while rival, Shoprite reported spending R560-million on diesel over the six months to January.
Chairman of the Eskom board, Mpho Makwana last month confirmed that the recovery of the Eskom coal fleet could not be achieved in the short term. “It will take at least two years to improve the energy availability factor (EAF) from the current 58% to 70%. The journey of the turnaround will see a stretch target EAF being driven toward 60% by 31 March 2023, a mere 10 weeks away, then 65% EAF by 31 March 2024 and 70% by 31 March 2025,” he said.
Lack of service delivery
When Seckham challenged him on the anger most South Africans feel when called on to pay taxes in a country that is not delivering on services, Kieswetter admitted there was merit in this argument. “That’s why we have a democracy where, ultimately, we vote for the government we want. My message to those who believe that withholding taxes is the best response is that it would simply aggravate the problems. I say, let’s get off our seats and let’s be activists. If this government does not deliver, they should not be in power. They should not be the governing party,” he says.
Kieswetter added that although he is employed by the South African government, he believes he works for South Africans. “I speak without fear or favour and when I see wrong in government, I’m not going to hold back simply because it’s politically correct,” he says.
In a scathing, no-holds-barred criticism of the current service delivery issues the country faces, Kieswetter says despite the intention of certain regulations, the unfortunate impact has been “inefficient procurement processes, inefficient recruitment practices — turning a process that should take a day or two into literally months because there’s so many signatories, so many desks it must go through. One of my biggest frustrations is — you are constrained by a framework that has been designed to regulate what you liberate, that has been designed to constrain not to free up resources,” he says.
As the former chief executive at Alexander Forbes now working in the public sector, Kieswetter’s observation is that things move a lot faster in the private sector. “If you need things to happen, there’s a strong bias towards action and there isn’t a slow bureaucracy.” BM/DM
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““That’s why we have a democracy where, ultimately, we vote for the government we want. My message to those who believe that withholding taxes is the best response is that it would simply aggravate the problems. I say, let’s get off our seats and let’s be activists. If this government does not deliver, they should not be in power. They should not be the governing party,” he says”.
All very well to say that – I have voted at every election and I did not vote for the ANC criminals/incompetents running the country – the problem is the people not paying any taxes are the ones voting to keep the ANC in power.
The truth is that the ANC is NOT going to totally deregulate power generation until the ANC cadres can get their snouts and trotters deeper into that trough. They don’t give a rat’s arse about the proles. They just care for themselves (and then about the ANC).
Ask Gwede, he will be able to confirm.
Well, Ramaphosa has clearly said in tonights’ SONA adress that a competitive generation philosophy is going to be followed to solve Eskom’s generation problems. And I see a move of energy away from the portfolio of Mantashe on the cards; it will begin with electricity being dealt with in the ministry in the Presidency, as the President announced. So I would say that one must not talk too early; the President, contrary to all the other parliamentary political parties except GOOD and maybe Al-Jamaah, is clearly focused on solutions and not necessarily on what the ANC wants.
Can’t exactly argue with what Kieswetter had to say here.
Except that SARS has to the best of our knowledge not pursued a single government official (or rather cadre) identified by the Zondo commission who benefitted financially from corruption.
Gordon 100% correct. But sars will hunt down and take out thousands of everyday citizens for thousand rand give or take. Amazing that!
If you look at how long it has taken the NPA to move because of lack of skills, SARS will probably move equally as slow.
Yes and until this results in actual accountability and real jail time, there is simply zero incentive for these awful rent seekers/grifters to cease their behaviours. Everything else is pure “noise”, regrettably.
A somewhat misleading headline given that the article says nothing about tax breaks for those who generate their own electricity.
Also there is only a mention of tax breaks for business, what of the homeowners who have traded a kidney for home PV using after-tax money and usurious mortgages, plus VAT on overpriced RE products? As with schooling, security, water and pretty much every household requirement we are filling the gaps created by state at own cost, with no relief.
That’s another form of taxation/redistribution – however, in the absence of honest government where one would embrace higher marginal tax rates to achieve the same ends, we have the ability to choose which gaps we fill. It would be much worse to pay more tax for promises of decent schooling etc only to see the proceeds p’d against the wall as is the case right now.
I am a huge fan of own generation but do not support subsidies. Solar makes more than enough economic sense as it stands. We would be stupid to incentivize small scale residential. It is not efficient doing 1000 homes with 3kW systems at R15/W stupid prices – larger scale commercial private generation generates far more cost efficient energy at around R9/W. Doubly so if you now want to police the admin of subsidizing 1,000 homes’ 3MW (versus two business’ 3MW if you are intent on subsidizing projects that easily pay their way for project owners).
What about tax breaks for individuals who are working from home and need to invest in renewable energy to generate income on which SARS and SA Government is also dependent?
How long will Kieswetter keep his job after those comments? Honesty is a not a virtue the ANC approves of.
Talk about stating the “bleeding obvious”!
Of course businesses are having to incur and divert additional and effectively (compared to normal circumstances) “wasted”expenditure to keep their companies running and yes, profits and thus taxes paid will be lower. And this year without the buffer of higher mining revenues and taxes. But no alarm bells or waving of red flags by SARS or SARB. And business is only now limp-wristingly complaining. Private expenditure( not tax deductible)has been similarly diverted with fortunes being spent on imported equipment just to run a home. The tragedy of a collapsed economy is visited on the poor but it is the middle-classes who pay the most taxes. The country is in a fiscal hole leading to a death spiral. Why wasn’t Kieswetter challenged on SARS failure to prosecute the myriads of tax cases arising from corruption and state capture and clawing back of those monies?
Mr. Kieswetter – It is amazing and refreshing to see a government employee who calls it as he sees it. If only ALL NGO CEO’s can step up and sort their units out. It seems that SARS is the only NGO that works. I am afraid to say it also seems to be because it collects money. SARS is more ruthless than BANKS! From where I stand all other government NGOs who get money from the fiscus to spend, do not have a clue. Perhaps SARS can run a financial management/reporting school/course for ALL financial positions at NGOs and municipalities and also oversee their spend. I know it is the AG’s office’s job, bit it feels like the “money dams” are leaking EVERYWHERE and no one wants to stop it! Also, why are we, the citizens of the country whom we hear the ANC serve, always made to feel we have to pay taxes, pay inflated rates and taxes, pay VAT, pay for our own security, medical, schools, increased fuel and electricity and now also do the governments work just so we can live “normal” functioning lives? What are we paying for then? Where does it end?!
Wow boy, stay on your lane, the President is going to love this.
the people who do not pay taxes have a vested interest in keeping the ANC in power for social grants , handouts, low security, ineffectual saps and lack of services.
people who do not pay taxes should not have the power to vote, that is as simple as it is.
people who do pay taxes, contribute to the economy and should have a say in how their money is spent without it being cancelled by the freeloaders.
benefits to companies, fair enough but what about private people, the public, the tax payers who are investing proportionately large amounts in riding themselves of EKdom and incompetent minister in cabinet.?