Finance minister Enoch Godongwana has increased the size of the SA Revenue Service (Sars) budget by R4bn after three meetings he had with revenue commissioner Edward Kieswetter, bringing the total over the next three years to R7.5bn.
The additional R4bn is not included in the Budget Review tabled on Wednesday.
Kieswetter has consistently argued that higher budgetary allocations to Sars is an investment which can generate good financial returns in terms of enabling the tax authority to collect more tax. Additional revenue would help the government address its fiscal constraints and assist in the delivery of essential services.
At a media briefing on Wednesday, Kieswetter said the budgetary allocation would be used for Sars to operationalise its systems. He said Sars had a significant debt book due to the state in uncollected tax as well as outstanding returns that had not been submitted. This refers to the tax gap which Kieswetter has estimated is R800bn.
In October last year Kieswetter said Sars had presented a business case to Godongwana, saying that if Sars was given an additional R1bn it could collect R30bn-R60bn in extra revenue. It needed to employ experts in information technology, data analytics, audit risk, and dispute resolution and investigations.
Kieswetter said during the media briefing that in the 2024/ 25 financial year Sars had used the R1bn allocated in the previous financial year for a ring-fenced project to target the reduction in debt and to facilitate a more efficient turnaround time of declarations against which refunds were due.
“If we don’t do that we will simply pay out the refunds without doing verification,” he said. This had been useful in preventing the outflow of impermissible refunds by using AI.
“What we have asked the minister is to retain that R1bn so that we can continue with this project and give us another R1bn so we can double up our efforts on reducing the debt book. If we can replicate the experience we have had in the current year that will also improve the revenue outcomes.”
Kieswetter said R2bn would be used in 2025/26 to reduce the balance sheet — outstanding returns and debt owed to Sars — and R500m for modernisation.
In the outer two years, R1bn has been allocated for each year to focus on the balance sheet project, specifically on reducing debt.
Further engagements would be held on the remaining R500m which Kieswetter would like to use to accelerate the modernisation project and build Sars’ internal capacity to close the tax gap.
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