‘There are many things we can do to improve efficiency. It’s going to take time, additional infrastructure and customs systems, and better interagency and interagency collaboration ‘: Commissioner Edward Kieswetter.
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FIFI PETERS: More budgeting stories. This time at the South African Revenue Service. The South African government hopes to raise 1.5 trillion rand in revenue in the year 2021/2022, and that is the announcement previously made by Finance Minister Enoch Godongwana. This income comes mainly from taxes paid by companies and individuals, as well as value added taxes on goods and services. It is R120.3 billion more than what was initially forecast in the last budget delivered by then-Finance Minister Tito Mboweni.
We have Sars Commissioner Edward Kieswetter on the line to explain the numbers. Edward, thank you very much for your time. This initially anticipated additional income should be a relief to you, but can you tell listeners what it means for the economy?
EDWARD KIESWETTER: In the first place, it has not been a relief to me; it means that we have to work much harder. The 120 billion rand, which the minister added to the initial printed estimate in February, is of course a difficult question. But here are the factors that give us a certain level of confidence.
First of all, we know that mining companies have specifically benefited from rising commodity prices and increased production year-over-year, and that has generated revenue that was not necessarily booked at budget time because performance It was better. .
Second, we’re also confident that Sars’ rebuilding work – the additional investment in people, technology, and data – is slowly starting to pay off. It allows us to detect and respond to risks. It allows us to handle the huge task of revenue collection a little better. So overall, we will strive to reap the additional 120 billion rand.
FIFI PETERS: If I can recall the minister’s words, most of this R120 billion comes from the mining sector. I think 85% or so was the exact figure. But the minister was also very cautious not to condition our plan or our spending on a continued boom in raw materials that would help the mining sector. In fact, he acknowledged the fact that we were seeing a slowdown in prices.
So where will Sars look for additional revenue in the next few years in an economy that is projected to grow around 1.7% over the next three years?
EDWARD KIESWETTER: The high contribution of the additional income referred to by the minister is a high-level view of the contribution that comes from this particular sector. But there are also losses. There are decreases in compliance. There are companies that have requested the rescue and liquidation of companies. There has been an increase in staff reductions.
So there are changes and roundabouts and therefore the additional money from the mining sector does not necessarily equate to a sustainable amount that we can add to the base. At the same time, to your question where the additional money will come from, I can share with you that only in terms of the additional capacity that we have built using data technology and machine learning, or so-called artificial intelligence, they were able to detect and prevent the leakage. of more than R30 billion from four different repayments. These are the taxpayers who deliberately and criminally attack our refund system to gain access to tax money. We also have our own compliance program, which in this regard would refer to additional efforts in debt collection, additional investigative work to increase taxes, additional surveillance at our ports of entry. All of this would also have contributed to round some R50 billion in additional revenue.
Then there are swings and roundabouts. It’s never easy, and just because the economy performs in a particular way doesn’t mean that all of that necessarily ends up at the treasury. Sars still needs to be vigilant and apply its laws very carefully to ensure that the money owed to the Treasury is actually collected.
FIFI PETERS: Our listeners can hear that he is currently on the road, and I understand that he was also on the road to Beitbridge last week. The minister said that you guys had a little road trip. However, we have heard and read quite often about truck delays and congestion and the cost to the South African treasury as a result of what is happening there, the inefficiencies. What are your plans as Sars for Beitbridge to improve customs infrastructure and systems?
EDWARD KIESWETTER: That’s a great question. Yes, we went to the minister last week, and the week before I went to our Lebombo border post, which is between South Africa and Mozambique, as well as our Oshoek border post, which is between South Africa and Eswatini, because the facilitation of the trade is a great facilitator of economic growth.
Going back to Beitbridge, to give you just one example, we have two lanes at the Beitbridge border post that limit the number of cars we can process at any one time. But then to compound that, once they have cleared South African customs, there is a single bridge lane to enter Zimbabwe for pedestrians and a single lane for trucks and cargo. So the capacity is absolutely and completely incapable of processing the volumes of trucks and people that we should be doing; As the minister said, at its peak there are 25,000 people, travelers and 900,000 trucks a day.
So, the first initiative is, what will we do in the coming years to improve the physical infrastructure of the border posts?
The second is the modernization of our customs systems. At this time, Sars dispatches most of the goods that have to cross our borders before a vehicle reaches the border post. And then there are other delays due to physical limitations, again, from inspections. The fact that it’s not just about Sars, but about Home Affairs and Agriculture, the South African Police and the Defense Force, they all have the need [to do so]. Therefore, we need to share information with each other so that we do not [inspect] a vehicle more than once, while [we could] really collaborate better.
And then thirdly, we need to share information with our Zimbabwean counterparts so that effectively the notion of the single border post means that once we have analyzed a good coming from our side, there is no need for them if we exchange opinions. . that we have with them, and the same in reciprocity when a truck or a traveler comes from their side.
So there are many things we can do to improve efficiency. It will take time, additional infrastructure and customs systems, and better interagency and interagency collaboration. That is the work that we did with the minister to go and evaluate so that, in fact, if we start now, in a few years, we can address that.
FIFI PETERS: All right, Edward, we’ll leave it there, sir. Thanks for your time. That was the Sars Commissioner, Mr. Edward Kieswetter.