SARS is Faced with R9bn Deficit over the Next Three years – Commissioner Kieswetter

Based on the South African Revenue Service’s funding requirements and the funding allocated to it, it will run into a R9 billion deficit over the next three years, members of Parliament heard this week.

SARS officials, including Commissioner Edward Kieswetter this week briefed the Standing Committee on Finance on the revenue service’s 2020/21 annual report.

Notably, SARS collected R1.249 trillion during the year, exceeding the revised targets of R1.212 trillion. SARS essentially collected R38 billion more, Kieswetter said.

Revenue collections were largely driven by personal income taxes, VAT and corporate income tax.

During the briefing, Kieswetter lamented that SARS is underfunded. For example, for the 2022/23 financial year, its funding requirement is over R14 billion, but it is allocated just over R11 billion.slide 1 of 1SARS’ funding requirements and allocation.SuppliedSARS

Deputy Finance Minister David Masondo, who was at the committee briefing, noted concerns raised by SARS over its funding requirements and highlighted that it is set to receive an additional R3 billion over the medium term. This was announced during the February budget.

Masondo said that everyone in government has been affected by “serious challenges” linked to the fiscus. He however noted that it is important to invest in SARS, but resource constraints have to be taken into account.

Kieswetter told Fin24 that SARS funding has remained largely flat, at just around R10 billion.

But the revenue service will be making use of the additional R3 billion to support its digitalisation strategy and target compliance. Of the additional R1 billion allocated for the 2021/22 financial year – a third will be used to recruit people with technical skills and two-thirds would be used for capital projects to accelerate its modernisation programme.

“Today we cannot process tax data on paper and with people only. We have to use super computers to crunch through terabytes of data to help us detect risk and draw trends, get insights. That help us with artificial intelligence to find out the ‘needle in the haystack’,” he said.

About R35 billion in the current year’s additional revenue has been recovered through fraud detection. Another R50 billion has been recovered from compliance activities – such as better investigations and using “legal instruments” to find, go after and hold taxpayers to book, he said.

Fin24

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