Sars, compliance and the lost opportunity to build trust

I am a resentful taxpayer. 

Edward Kieswetter, commissioner of the South African Revenue Service (Sars) told parliament in March that most taxpayers have “a pleasant and almost seamless experience” with the body and that resentful taxpayers like myself are usually non-compliant. 

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“We are the vanguard, the last line of defence to ensure the government receives its money due to it,” he declared. I am not sure if my editor will let me put this on record, but I really dislike that guy and the version of Sars he is building.

I was once a believer in Sars, but my admiration has long died. The first source of my discontent is the typical testimonials more friends and family share: You submit your returns as usual and are audited again this year. You send the requested documents. More documentation is sought. Maybe Sars decides that expenses that could be claimed last year for that additional income are no longer valid. Maybe you receive a completion letter with a no-change notice, but some days later, you might get another audit notice with a new case number, and filing your returns feels like a compliance Groundhog Day

My second gripe is the tone that the Kieswetter-led Sars has chosen to use with the public, despite the commissioner’s claims that “Sars proceeds from the premise that most taxpayers are honest and want to fulfil their legal obligations”. No, it doesn’t.

Like many other taxpayers, I am old enough to remember the days of the Harvard-case study on Sars. The Sars that moved from a paper-based inefficient bureaucracy to an award-winning, world-class revenue collector. In the transition to a democratic state, the new administration inherited a comparatively high revenue-generating state which reflected the highly formalised economy and the country’s history of high tax collection to fund a militarised state. 

Despite this, both revenue and tax compliance were, however, well below their potential levels. Protests against apartheid had inadvertently created a culture of tax avoidance and so by the early 1990s, an estimated 6% of citizens were paying income tax, and business was no better. 

Much like today’s Sars, the revenue authority in the late 1990s and early 2000s was faced with challenges of high revenue targets, organisational modernisation, and addressing revenue leakages. A key objective for Sars was to curb corruption through customs fraud, commercial fraud, global trafficking, illicit drug trade and other crimes. This required a major transformation effort. As the World Bank details, Sars chose a three-pronged compliance model predicated on education, service and compliance — with compliance being the pillar of last resort. 

I experienced the fruits of these investments as I entered the workforce in the late 2000s. Because of the genuine approach to tax education undertaken by the institution, I always felt less of a taxpayer and more of a citizen. I, along with millions of other citizens, experienced an institution that made great strides in improving its processes to make it easier to pay taxes (service) and that made itself available to citizens to educate and simplify. 

Alongside this great improvement in the citizen experience in paying taxes, life was getting better. More grants and social services were reaching more people, more children were attending school, more roads were getting built and also more criminals, particularly white-collar criminals, were getting arrested. 

But above all, Sars did not treat the taxpayer with an assumption that you were maliciously noncompliant. 

Kieswetter’s line about being “the vanguard, the last line of defence to ensure the government receives its money due to it” also betrays the organisation. The role of the revenue collector cannot simply be about rendering what is due to Caesar. Sars isn’t a mashonisa. Like all other public institutions, at its core, Sars should be viewing itself as a citizen-centric institution that contributes towards building a better country. 

Sars does not function outside the sociopolitical context of rampant corruption, maladministration, and misuse of public funds. One of Sars’s strategic objectives is to “build public trust and confidence in the tax administration system”. But in its processes and approach, this is an afterthought, far below objectives on making people comply and tracking and punishing those that do not. 

Additionally, when Kieswetter is faced with criticism, he deflects. Earlier this year he criticised Daily Maverick journalist Marianne Merten for writing an honest reflection of her experience with the institution, saying, “the issue of raising individual tax matters on a public platform, or in this forum, we consider highly inappropriate”. Unfortunately, members of parliament did not react strongly enough to this public servant’s highly inappropriate response to a genuine issue expressed by other citizens.  

There is some academic research that suggests a relationship between the emotional experiences of those paying tax and their levels of compliance. These emotions can range from feelings that reflect perceptions about justice, fairness and equity of the tax system. A paper led by Janina Enachescu from the University of Vienna concludes that “emotional experiences play an important role in tax compliance decisions and that, therefore, it is crucial to consider the taxpayers’ subjective perceptions when designing policies to promote compliance”. 

In its description of its aims, Sars says it aims “to engage with society in a way that earns public confidence and trust, while fostering a willingness to fulfil its obligations”. Kieswetter’s public posture does not lay a single brick towards building more confidence and trust in ordinary citizens. 

There is room for aggressive enforcement efforts to promote compliance, particularly of high net worth or high-profile individuals who are known to be living with means that exceed their known incomes. Such initiatives build the credibility needed to move citizens towards compliance. But despite what Kieswetter may tell parliamentarians, the heavy-handed treatment of ordinary citizens destroys public trust and, in the long run, will contribute towards more resentment and avoidance.

As I write this column, I am charging two laptops in order to be able to work for the full two-and-a-half-hour blackout that often turns to more than three hours. I would have driven to work but I am rationing my petrol because buying fuel gives me a tiny heart attack. After replacing another appliance, I’ve spent a small fortune on surge protector devices. I’m at least grateful to have running water, after experiencing days of no water for a number of weeks. 

The tax burden has increased, while the quality of life has plummeted.

Data from FNB’s property barometer shows that between 2015 and 2019, housing sales related to emigration grew steadily, from 5% of total sales in 2015 to a record-high 13.4% in the second quarter of 2019. Those who are leaving are in wealthier tax brackets and, given the evolutions in work, an increasing number are likely moving with their job, meaning that once they leave, no other person takes up that position to replace that tax income. 

Kieswetter and Sars would do well to find a little bit of humility in their approach to citizen engagement. They could start by remembering that South Africans have experienced a much more empathetic and supportive Sars in recent years, enough to have something to compare this current iteration of Sars to. They can remember that chasing short-term targets by whatever means necessary can tend to create negative externalities in the medium term. 

To reduce my troubles with Sars, I will be using an accountant to engage with Sars directly, not because my taxes are complicated but because I am sparing myself the frustration. Tax season is also that time of the year where I wonder whether it is time to start considering leaving South Africa and moving to a country that is on a stable or upward trajectory. 

I suppose I should be thankful that the revenue collector has chosen to be the mascot for state maltreatment and lack of consideration for citizens. Things probably feel more bleak because I experienced a world-class Sars, I lived in a constantly improving country, we were on our way to thriving and now we have institutions that bully citizens to collect money that is not used to make life better for all. 

Zama Ndlovu is a columnist, communicator and the author of A Bad Black’s Manifesto. 

The views expressed are those of the author and do not reflect the official policy or position of the Mail & Guardian.

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Zama Ndlovu
Zamandlovu Ndlovu is a social activist and the author of A Bad Black's Manifesto, as well as a columnist and communicator.

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