This past week, the SA Revenue Service (Sars) lost its cool with a taxpayer. In a regrettable move, the tax collector laid bare the affairs of Lucky Montana, the business executive turned politician.
Since 2020, Sars has been engaging with Montana, the former CEO of the Passenger Rail Agency of SA (Prasa), over his tax matters. The noncompliance — to file returns — led to him being audited. The audit, covering almost a decade, found him to have under-declared income from several sources and assessed his debt at more than R50m.
According to a lengthy media release, Montana, now an MP representing Jacob Zuma’s MK party, objected to the assessment. At some point, he offered 10% of the assessed amount. When that failed, he took his battle to the media and claimed harassment and abuse, suggesting that the tax administrator was motivated by a political agenda.
Sars takes the bait
This public accusation prompted Sars to follow him into the public square. It claimed that it had a right to punch back to stop these attacks from undermining the public’s confidence in the revenue service.
While this is understandable — and even permissible under the applicable laws — it is regrettable and should not have happened. Sars allowed itself to be baited by Montana.
He is now a politician, an opposition politician at that. The pushback tactics are rough. They include the use of the media.
It’s unclear whether Montana’s attacks on Sars have the support of his party or its boss. Years ago, Zuma dared Sars in court to publish his tax affairs. Wisely, the tax authority refused to do so.
Though last week’s media release was measured in tone, it was unprecedented. It covered mostly the timeline and correspondence between Sars and Montana over the years.
But it is disturbing.
Sars conducts many audits where it suspects noncompliance. These typically involve both individual and corporate taxpayers. The disputes are a hectic to-and-fro between the taxpayer and the revenue service or their legal representatives. Some end up in courts. But few find their way into newspapers or the public domain, and this should be the case.
Rebuilding Sars’s hard-won credibility
The media spat between Montana and Sars is taking place at an inopportune time. Sars is one of the state institutions that was targeted by state captors.
Most South Africans are law-abiding and they should be encouraged to honour their tax obligations. They should be made to love Sars, not fear it.
It was hollowed out. In the past seven years, considerable progress has been made to restore its capability and credibility among taxpayers.
It is under tremendous pressure to collect every rand from the few million South Africans who have an income in the sea of unemployment to fund social welfare programmes.
This is a thankless task.
On numerous occasions, this newspaper has commended the sterling work that has been done by the recovery team under the leadership of Edward Kieswetter. This work should be consolidated as Kieswetter prepares to leave office next year. His five-year term was extended after it expired a year ago.
Protecting trust while collecting taxes
As well as the stick of legal action, Sars has many carrots to incentivise taxpayers to pay their due. These include its world-class voluntary disclosure programme and tax education. Most South Africans are law-abiding and they should be encouraged to honour their tax obligations. They should be made to love Sars, not fear it.
Sars is one of the few public institutions that has successfully been rebuilt. Others — such as the National Prosecuting Authority and SA Police Service — are still reeling from the state capture years.
The Madlanga commission of inquiry into corruption in the criminal justice system shows how big the challenge of rebuilding the public’s trust in the police is. Evidence heard so far suggests a police force at war with itself.
Sars shouldn’t allow itself to be distracted from the task of rebuilding and implementing its core mandate, which is to collect taxes.
Montana is a man with little to lose. Sars, on the other hand, has a lot to lose from an unseemly spat.
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