Sars may act as 'judge and jury'
Proposed changes to tax law intended to make it more user-friendly could be undermined by sweeping new powers envisaged for the South African Revenue Service (Sars).
According to Stiaan Klue, chief executive of the South African Institute of Tax Practitioners, the draft Tax Administration Bill (TAB), which was released for public comment last Saturday, would give Sars “absolute power”.
Sars officials would have the authority to perform a search and seizure of taxpayers’ documents and assets without a court warrant and to “act as judge and jury”, he said.
The Bill outlines what Sars’s chief officer for legal and policy affairs, Kosie Louw, has called “the first step towards the rewrite of the Income Tax Act”. Its main objectives are “to provide a single body of law that outlines common procedures, rights and remedies” and “to achieve a balance between the rights and obligations of both Sars and taxpayers in a transparent relationship — The TAB takes account of the constitutional rights of taxpayers but does not seek to re-codify them.”
According to Sars media spokesperson Adrian Lackay: “Sars had requested independent senior counsel to do a constitutional review. The legislation has been benchmarked internationally and Sars believes it is in line with what other revenue administrations around the world are doing.
“Sars obtained the assistance of International Monetary Fund experts who confirmed we’re in line with international standards.”
He added that Sars would not have absolute power, as a number of “internal bodies” would exercise oversight on its activities along with the Public Protector, the Auditor General and Parliament.
But Klue is appealing to the public to be aware of their rights because there is a risk they could be infringed if the Bill becomes law. If Sars misuses powers that may be granted to it, the battle can only be fought after the fact. “And what taxpayer can really take on Sars?” he asked.
“Sars has used this opportunity to slip in nice provisions that give them special powers,” he said. “We understand the purpose of Sars being provided with certain powers, for when there is no time for a warrant, for example. But the problem is that it is very subjective.”
Klue said under current legislation Sars is required to obtain a warrant from a judge. “But [in the Bill’s provisions], a senior Sars official makes this decision and he is not trained legally — A Sars official has the power to issue an assessment — impose penalties and additional taxes, take judgment against the taxpayer without due process and seize that taxpayer’s assets, all without prior notice to the taxpayer and without reference to a court.
“In addition, a Sars official is empowered to invade the private home of a taxpayer without a warrant, to instruct a police officer to assist in the invasion and with impunity, cause such damage to property as inevitably results from an invasion of this nature.”
But there is one way the system could work, said Klue, and that is with the introduction of a tax ombudsman. “This will allow for some reprimand of Sars,” he said.
The Bill is open for public comment until February 26, at www.sars.gov.za