Edward Kieswetter says taxpayers’ willingness to comply has been eroded by poor governance. (Screenshot: YouTube)
South Africa’s deep inequalities are shaping the country’s tax system more than the design itself, South African Revenue Service (Sars) commissioner Edward Kieswetter has said.
He told a forum on tax and governance that the burden on the fiscus reflects how unequal the country is, adding that weak trust between citizens and the state continues to undermine compliance.
“We have 62 million people who pay VAT. Every time they go to a point of sale, they buy bottled milk, bread, cheese, meat, they pay tax. Twenty-seven percent of our tax contribution comes from VAT,” Kieswetter said, noting that VAT is collected from everyone, regardless of wealth.
“If the VAT payment is disproportional from the wealth, it’s a reflection of inequity in our society, not of the taxes.”
About 35% of revenue is collected from personal income tax. Kieswetter highlighted that out of the 16 million employed people, only eight million pay tax.
“Within eight million, about 500 000 pay almost half of the tax because they earn more than a million rand. This is a reflection not of the tax system but of inequality.”
Kieswetter said the willingness of taxpayers to comply has been eroded by poor governance.
“The level of tax morality, and overall morality in society, is determined by the overall social contract between the citizen and government.
“And that contract has been eroded because of inefficient spending, high levels of corruption and visible self-enrichment by a few. So taxpayers then feel morally justified not to pay their taxes.”
He stressed that compliance is shaped less by punitive enforcement than by whether taxpayers feel their money is used effectively.
Kieswetter described the three “bubbles” that determine tax revenue: the number of tax instruments, the efficiency of tax administration and the integrity of the institution.
He outlined how Sars has modernised compliance systems and adopted artificial intelligence to make tax filing easier and more accurate.
“Our entire compliance theory is modelled on the notion that most taxpayers are honest and want to just get this simple tax out of the way,” he said.
This year alone, 5.8 million of the 7.3 million assessed taxpayers did not need to submit returns because of pre-populated information.
“If you help people understand their obligations, they’re more likely to comply. Secondly, if you make the fulfilment of that obligation almost seamless, they’re more likely to comply.”
Kieswetter said Sars had already paid out about R22 billion in refunds during the first six weeks of the 2025 tax season.
“Our primary use of risk profiling is biased towards service, but at the same time, we have to manage risk to the fiscus.”
Three-quarters of refunds are completed within 21 days, he said, and delays are usually the result of non-cooperation or risk verification. “One out of every 10 that we reviewed last year saved the fiscus almost R50 billion. So it’s not unnecessary work.”
Kieswetter said compliance leads to refunds which act as a stimulus to the economy. Last year, Sars paid R447 billion in refunds. “That’s a huge injection of cash into the economy because that R447 billion will buy more stuff on which there’s more tax. We’ll grow businesses on which there’s profits and taxes on profits. We’ll create more jobs. This multiply effect is real.”
Over the past six years, tax revenue has grown by just over 7% a year. Refunds have grown even faster at 9%.
“We will not manipulate or retain refunds to boost our revenue numbers,” Kieswetter said.
He echoed concerns raised at the G20 about unsustainable borrowing costs. “We in lower-income countries not only have high levels of debt, but also the issue of high pricing of debt is a concern.”
He argued for “domestic resource mobilisation” — improving the efficiency of revenue collection — to reduce reliance on debt.
“If we could halve our debt service cost by smartly managing the overall fiscal framework, not in the short term but in the longer term, think about how much more we can inject and grow our economy.”
Commenting on the G20 debate about taxing the rich more aggressively, Kieswetter said there was merit in reviewing how wealth is taxed.
“I belong to the camp that says ithere definitely is a case to review the tax on the wealthy. But, again, I don’t believe that it must be driven by a political motive. It must be driven by scholarly work that reconceptualises how do we create a tax system which is more equitable.
“Our current tax system does not equitably tax wealthy people compared to working-class people. But I would invite a more considered and strategic approach.”
Kieswetter said restoring trust and integrity remains at the heart of Sars’s rebuilding project after the “lost years” of state capture which saw the deliberate hollowing out of the tax agency.
“South Africans will never understand how decapitated Sars was because of state capture. Slowly, we lost public confidence. We lost the trust between employees and leaders,” he said.
Kieswetter’s tenure ends in April 2026 after President Cyril Ramaphosa extended his term by two years.
He emphasised that his was a technocratic and not a political role.
“There’s an element of my job that says I must advise the minister of finance on tax policy, or any matter relating to revenue, and I do that. But not as a politician. I do that as a technocrat, as a strategic thinker about the nexus between tax policy and tax administration.”
He said during his seven years at the helm of the agency, his job had been to resist political interference, strengthen tax administration and maintain the social contract that binds citizens to the state through fair and transparent taxation