How much of the revenue shortfall is a result of the economic downturn and how much is tax avoidance?
By the end of March, we expect to have collected R1,5bn more than we predicted last October. That's because the recovery came two months earlier than we expected and we have also seen January Vat receipts improve.
Oupa Magashula
The penalties we introduced [in January] have led to a 20% year-on-year increase in tax returns that were filed. We have had 750 000 tax returns since the beginning of the year. We also expect to collect about R2bn in other areas where people who have been avoiding payments will be tracked down. What have you found to be the most common forms of tax avoidance during the recession?
It has mainly been through undeclared income, such as interest, and sometimes more out of ignorance and not deceit. Then there are cases of employers who collect pay as you earn (PAYE) and then do not pay it over. That is a purely criminal act.
There is also the offshore activity, which we clamp down on through improved information exchange between countries. I recently went to the US to sign a new tax treaty and have a three-way meeting with the UK. I am also chair of the African Tax Forum, which comprises 30 countries and we have already begun information sharing. We are also receiving [an increase in] requests for information.
You have used the voluntary disclosure (from November) to catch tax cheats. How effective is it? Do you have any other tools you can use?
Over the past two years we have established data points for third-party verification. We have now linked up with banks and other financial institutions. We were able to detect a taxpayer who has not declared interest of R1,3m. We are now going to be able to monitor credit card transactions. We are moving to a stage where we will be able to construct an individual's balance sheet and income statement. Then you will have to explain any undeclared income.
If you do not take advantage of this voluntary disclosure, we will catch you in other ways.
If taxes were to be raised, how would you decide which revenue source to raise from?
Firstly, the tax has to be equitable and we have to minimise the gap between company and personal taxes to remove arbitrage. Then our tax has to be internationally competitive. Then we consider the fact that raising Vat, for example, hits everybody. We would have to look at all those factors. But if revenue does not [add up], unfortunately government programmes have to be funded by the people of this country.
Is the additional tax on fuel not a mistake given the weak economy?
The only new component is the funding of the [multiproduct] pipeline from Durban to Johannesburg, everything else is normal. The pipeline has to be funded. Over time motorists will benefit.
Is the job (of Sars commissioner) turning out to be everything you expected?
This is an important institution, as South Africans, we need to defend it with our lives.
I have been at Sars for four years and this job is everything I expected. It is only getting better. We are getting smarter.
