POLITICS

How President Zuma Set Up The Sars Fight

The dogfight between Tom Moyane and Pravin Gordhan has been set up by the president who is determined to get control of the Treasury.

27/02/2017 13:03 SAST | Updated 27/02/2017 13:56 SAST
Esa Alexander/The Times/Gallo Images/Getty Images
President Jacob Zuma congratulates Finance Minister Pravin Gordhan after his 2017 Budget speech at Parliament on February 22, 2017 in Cape Town, South Africa. Gordhan announced hard-hitting increases in personal income tax of R16.5bn for 2017-18 as economic growth stutters and revenue collection falls short of expectations.

ANALYSIS

The remaking of the South African Revenue Service (Sars) is one of the best stories of the post-apartheid democracy.

The journey of Sars from the inefficient and corrupt Inland Revenue service of apartheid to the machine servicing South Africa's social democracy has been chronicled in at least two business school journals.

If you pay tax, you will know that it is possible to do so electronically and if you are due refunds, you will know that they arrive quite efficiently. Returns are processed quickly.

By ramping up collection, Sars has been the engine funding the creation of Africa's largest social democracy: South Africa pays grants to 16.9 million people every month, funded by tax. The country receives no aid to support social grants.

The apartheid state's ability to collect tax was stunted by institutional inefficiency and tax morality was low from individuals to business.

Now, the corporate sector shakes in its shoes at the arrival of a communiqué from the revenue authorities. Sars has ripped apart the illegal tax dodges in sectors as diverse as mass retailing, the tobacco industry (notorious for tax dodging and smuggling), alcohol, the electronics industry and the banks, among others.

Sars tugged at the heart of "white monopoly capital" long before the term became current.

A handful of examples prove the point. It took on Metcash, Hi-Fi Corporation, the tax dodger Dave King; Billy Rautenbach and Hyundai; JCI and the Kebble family who were mining magnates. Sars was also well known for infiltrating the underworld where illegal financial flows can subvert nation states.

Sars went toe to toe with the drug dealer Glenn Agliotti who corrupted former top cop Jackie Selebi; Cape Town crime kingpin Quentin Marinus; the late Lolly Jackson who ran a lucrative sex and drugs empire; and Radovan Krejcir, the Serbian underworld strongman who is now in jail.

Sars was re-engineered by now Finance Minister Pravin Gordhan who built a world-class team. When he quit to join Cabinet, Oupa Magashule took his place.

When Magashule resigned, President Jacob Zuma bucked the practice of the finance minister choosing the Sars boss when he intervened to have Tom Moyane appointed commissioner over a shortlist drawn up by then Finance Minister Nhlanhla Nene. Legally, the president signs the appointment but the practice has been that the incumbent is chosen by the finance minister in an open race.

When Nene was fired and Zuma precipitated an economic and political crisis by appointing Des van Rooyen to the National Treasury, the ANC tapped Gordhan to take on his former role. Reports say Gordhan agreed on condition Moyane was redeployed to another role in the public service.

The Sars commissioner and the finance minister need to work like a hand in a glove because the national Budget only has meaning if revenues are collected efficiently. Zuma has refused to move Moyane and instead holds him at Sars as a bulwark against the Treasury in general and Gordhan in particular.

Moyane has denied that he laid charges against Gordhan in respect of the so-called "rogue unit" at Sars but there is a case number at a Pretoria police station.

The dogfight between Moyane and Gordhan (now exploded into bloody public view after an investigation by the Mail & Guardian,) has been set up by the president who is determined to get control of the Treasury and its associated institutions in order to push through legacy-making (and lucrative) deals like those for nuclear power and various other expensive infrastructure.

The Treasury's powers over spending are protected in the Constitution but the finance management laws that govern public money annoy many politicians who have grand plans and projects to build their personal power.

The appointment of Brian Molefe as an MP last week is part of a plan to surround Gordhan with powerful officials who are loyal to the president and who will execute on his plan that grows more urgent as his time in office grows shorter.

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