21/02/2018 14:45 SAST | Updated 21/02/2018 14:45 SAST

Gigaba Won’t Fire Sars Boss Even As Tax Collection Plummets

But the finance minister is worried about the continued tenure of Sars executive Jonas Makwakwa who is under investigation by the Hawks.

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R48.2-billion! That's the size of the revenue hole in the fiscus. It is a key factor behind the tough budget tabled by Finance Minister Malusi Gigaba on Wednesday.

The SA Revenue Service (Sars) improved collection by R3-billion to come in under the R50-billion shortfall projected in October last year. But it's still a big hole caused by "weaker-than-expected economic growth, and concerns about tax morality, compliance and administration.

Now VAT is going up with lower personal income tax increases. Last week, President Cyril Ramaphosa announced a commission of inquiry into tax administration to probe the efficiency and performance of Sars.

Sars has been dogged by controversy after an exodus of more than 50 senior staff members including deputy commissioner Ivan Pillay. Its executive Jonas Makwakwa who is the chief officer for business and individual tax is facing an investigation by the Hawks for alleged tax evasion and money-laundering.

He was cleared of wrongdoing by the international law firm Hogan Lovells, which carried out an investigation for Sars. That case is now before the Solicitors' Regulation Authority after it was referred by Lord Peter Hain a British Labour Party politician with strong ties to South Africa. Hogan Lovells has denied wrongdoing. Gigaba said on Wednesday that he was talking to Sars commissioner Tom Moyane about Makwakwa's case. "We are sensitive to public perception," he said.

Gigaba has announced he will introduce legislation to return the accountability of Sars to the minister of finance. Moyane reports to the president -- not to the minister of finance. He would request Moyane's resignation, said Gigaba, and said processes like the inquiry announced by Ramaphosa should be allowed to run their course.

"Tax morality is a crucial component of a healthy democracy. It has taken many years and lots of effort to build the foundation of trust that supports our tax morality. We have seen how quickly citizens trust can be eroded by perceptions of poor public governance," said Gigaba in his speech on Wednesday.