BY: Saneliso Mlambo
South African Revenue Service (SARS) Commissioner Edward Kieswetter has expressed reservations about implementing tax hikes as a means to increase national revenue. Instead, he advocates for enhancing the efficiency of tax collection to recover a substantial portion of uncollected taxes, estimated between R700 billion and R800 billion annually.
Kieswetter cautions against the assumption that raising tax rates will automatically lead to increased revenue. He references the 2017 Value-Added Tax (VAT) hike, suggesting that such measures do not always yield the intended financial benefits. His stance is that focusing on improving SARS’s administrative capabilities would be a more effective strategy.
The Commissioner emphasizes the need for government investment in SARS to enhance its capacity to collect taxes already owed. By addressing inefficiencies and closing gaps in the current system, SARS aims to recover significant uncollected funds, thereby bolstering the national budget without imposing additional burdens on taxpayers.
Finance Minister Enoch Godongwana has expressed dissatisfaction with Kieswetter’s public comments opposing tax hikes. During a recent briefing, Godongwana was overheard criticizing the Commissioner’s remarks, highlighting a potential rift between SARS and the National Treasury regarding fiscal policy approaches.
The debate underscores a critical policy discussion, whether to increase tax rates or to enhance the efficiency of existing tax collection mechanisms. Kieswetter’s position advocates for the latter, focusing on recovering substantial uncollected taxes to improve the nation’s financial standing without additional tax burdens on citizens.