A senior South African Revenue Service (Sars) executive on Tuesday, explained how the organisation’s revenue compliance programme was destroyed by the restructuring project implemented by suspended commissioner Tom Moyane.
Former Sars executive for tax and customs compliance risk, Thabelo Malovhele was testifying at the Commission of Inquiry into Tax Administration and Governance by Sars in Pretoria.
He explained that the dropping of compliance created the fall of revenue collection
Malovhele said when he started at the revenue services in 2005, compliance was non-existent
We found the Canadian Revenue Service had done this work, we conducted a visit in 2008 then developed a framework we learnt from the Canadians.
He said by 2011, they were able to provide Sars with a picture of compliance among the tax base, they were doing well to a point that other African countries started approaching them to learn how to measure, monitor, and report on compliance.
Evidence leader advocate Carol Steinberg read from an affidavit from a former employee, that the Sars compliance unit was rated as one of the best in the world.
Malovhele said when Moyane introduced the organisational update of the new model, the compliance research function was missing and he raised this issue.
At that time, Malovhele was also informed that he has been replaced and had no further role to play.
“As we speak, there is no compliance programme in place. Where it was moved there was no competency to do it. There was a lot of talk about revenue collection, but none about compliance. It was only a matter of time before I saw revenue collection falling,” he said.
“I showed them that compliance was slipping. You don’t collect money without a return filed. [The number of] those who filed [their] returns was dropping.”
Malovhele said he was now considered a domain specialist and had no job description. He was not permitted to have subordinates.
He said despite compliance removed from his responsibilities, he had been asked to develop a strategy but has no staff or resources.
He explained that in 2017, Sars scrambled to draft a new compliance programme, it was a duplication of the 2012 programme which included focus areas which were no longer relevant and it failed.
President Cyril Ramaphosa appointed retired judge Robert Nugent in June, to chair the commission to probe allegations of financial misconduct at Sars, including a shortfall of R50-billion between 2014 and 2018 under Moyane
Ramaphosa suspended Moyane following a breakdown of trust in his running of the organisation.
The hearings are expected to run until next week Friday.