Failing to pay your tax deprives all and will be punished
July 29, 2009
By Oupa Magashula
Throughout the world revenue administrations are grappling with a falling intake from income tax, consumer taxes and trade taxes. In South Africa we too are battling - although our revenue revisions are nowhere near as extreme as those in many other countries.
But our response is no less urgent and no less critical than those of our counterparts in the UK, the US and elsewhere.
Of course, no one can collect revenue which is not there or not due. But in every economy there exists a revenue gap of varying degrees between what is paid and what should ideally be paid. Closing this gap has received ongoing attention over the years, but given the revenue reality we currently face (we are already R19 billion below target for the first quarter of the fiscal year) this must now become a priority focus for South Africa.
Tax morality is a cornerstone of any nation's developmental agenda and is a fundamental responsibility of each and every participant in an economy. We remain encouraged that the vast majority of individuals, businesses and traders continue to be compliant and contribute positively to the development of our country.
In fact, our tax register has increased at an average of 10 percent a year over the past decade, pointing to a steady growth in the culture of compliance in this country.
Companies, too, have come to the party, with more and more sharing the view that corporate tax planning cannot and should not occur in isolation from an organisation's broader social commitment policies and agenda.
This growth in tax compliance has had a tremendous pay-off for our country. Buoyant revenue collection over the past 10 years, when income grew from R184.8bn in 1998/09 to R625.1bn in 2008/09, played a vital role in creating the "fiscal space" that has enabled the government to accelerate spending on social development, while at the same time reducing state debt and giving South African taxpayers more than R90bn in annual tax relief.
However, there are still those who do not see tax evasion as immoral or who view it as a victimless crime. Tax evasion is a crime against us all. Its victims are the young and the old, the helpless and the weak, the sick and the disabled. Its victims are you and I who pay our fair share and proudly meet our obligations.
By robbing the fiscus of money due to it, tax cheats constrain the government's ability to provide for all our citizens.
Our compliance model has always comprised of three strands - education, service and enforcement. The modernisation drive at the SA Revenue Service (Sars) is all about improving efficiency and enhancing service. The simplification of the tax return form and the introduction of various innovations in the past couple of years are intended to free up capacity while creating convenience for taxpayers - thus making compliance easier.
Nonetheless, transforming a culture from evasion to compliance depends on enforcement and legal recourse, including penalties and fines. The consistent enforcement of these is an important part of the story of influencing individual behaviour in the public interest.
That is why this year Sars will increase our focus on detecting and punishing non-compliance. We will intensify our risk management and audit capacity, including the employment of 1 000 additional specialists with skills in areas such as auditing, finance, banking and other key sectors. We will expand and enhance our use of third-party data from employers, financial institutions, medical and pension funds and others to ensure taxpayers pay their dues.
We will intensify our focus on high-net-worth individuals and their tax behaviour and will unravel tax schemes aimed at aggressive tax avoidance. We will redirect resources to our enforcement capability and will be targeting those with outstanding returns and outstanding payments.
Nearly 7 000 employers who failed to submit their PAYE reconciliations to Sars on time have already received penalty letters amounting to R730 million. Many more are set to follow. In addition, 4 000 employers who have not paid over taxes withheld from employees are due to be issued with summonses.
We will also focus on those who remain outside the tax net.
Improvements in our PAYE process have already identified 600 000 employees who should be registered for tax but are not. They will soon be getting a call from Sars. And we will be taking our compliance approach to the streets, inspecting businesses on the fringes of the formal economy to check on registration and compliance.
This is only the beginning of our zero-tolerance approach to those who deliberately seek to pass their obligations onto the rest of us.
During this tax season Sars will be clamping down on non-compliance, including late submissions. Tax season, which launched on July 1, provides 12 weeks for the submission of manual returns and 21 weeks for the submission of electronic returns. There should be no excuse for late submissions.
By playing our part, we are all helping to make South Africa a better place.
Oupa Magashula is the acting commissioner of the SA Revenue Service
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