08/11/2017 07:02 SAST | Updated 08/11/2017 07:02 SAST

Gigaba's Sars Inquiry Announcement Surprises Experts

There has been surprise and skepticism over the announcement of the Sars inquiry.

Esa Alexander/The Times/Gallo Images/Getty Images
Finance Minister Malusi Gigaba is flanked on his right by treasury director-general Dondo Mogajane and on his left by his deputy Sfiso Buthelezi and SARS commissioner Tom Moyane during Gigabas Medium-term budget speech in Parliament on October 25, 2017 in Cape Town, South Africa.

The announcement on Tuesday by Finance Minister Malusi Gigaba that there will be an inquiry into Sars came as a surprise to tax experts, Business Day reported. This reportedly includes Judge Dennis Davis who heads a committee working on tax reform.

The inquiry is being set up to find out why Sars is not meeting its revenue collection targets and to find ways to improve performance management systems at Sars, the report said. President Jacob Zuma reportedly granted Gigaba's request for the inquiry.

Gigaba reportedly said on Tuesday: "It is critical for government to determine the cause of the tax-revenue undercollection in order to enable government to take urgent remedial steps to ensure that Sars is able to meet its revenue targets."

Davis told Business Day that he was not told about the inquiry.

"We've done our work, but at a very limited scale. I think he [Gigaba] is looking for something more targeted. That may not be our work," Davis said.

But despite Gigaba's stated reasons for the inquiry, experts told The Times that his motives were unclear.

Keith Engel, CEO of the South African Institute of Tax Professionals, reportedly said the inquiry was bizarre.

"When Trevor Manuel was finance minister‚ it would have been Pravin Gordhan‚ as SARS head‚ who would have approached the minister and announced to him that there needs to be an inquiry and not the other way around as we are seeing now," he reportedly said.

Engel said looming ratings agency reviews could have contributed to Gigaba's decision to set up the inquiry.

"Government is clearly hoping that an inquiry into SARS would show the agencies that it is taking active steps to close the budget gaps. This would work in normal circumstances‚ but not when it comes to rating agencies. At this point rating agencies don't want to see inquiries‚ they want to see action such as curbing expenditure," he said.

But former finance minister and MP Pravin Gordhan said the inquiry could obfuscate issues at Sars.

On the sidelines of the Eskom inquiry on Tuesday, he told IOL: "It could be a case of delaying dealing with the issue and obfuscating it. I think you just need to replace a few people and confidence will be restored."

Gordhan reportedly said that unless there were leadership changes at Sars, "I don't see any improvement." He said the current Sars commissioner, Tom Moyane, was not fit to head the organisation.