It has been seven years in the making and through two rounds of public consultation, so the soon to be promulgated Tax Administration Bill shouldn't come as a surprise. Nevertheless, for many it will be just that.
The bill will give the SA Revenue Service (Sars) wide-ranging powers to search and seize documents, summons taxpayers to hearings at its offices on either their or other people's tax affairs, and the right to any information it deems relevant to a person's tax affairs, either from the taxpayer or from a third party, like a bank.
In the memorandum on the objectives of the bill, it says the bill will allow Sars' information-gathering powers to be "substantially supplemented".
Sars says it needs these powers to catch those people who aren't paying tax. These powers, it says, are no different from those given to many other tax regimes. It is correct in this but what is of concern is the recourse afforded to a person who is affected negatively by the wrongful use of such powers.
Right now these recourse rights are inadequate, despite the bill seeking to amplify and make taxpayers' rights more explicit. And though a tax Ombud has been provided for, the Ombud is appointed by and reports to the finance ministry. The Ombud's office will be funded by Sars, and the office will be on Sars premises and staffed by Sars employees. Concerns have been raised whether the Ombud will be truly independent.
South Africans are required to pay taxes and Sars should be given the means to track down those who don't. However, the power this bill gives Sars is worrying, especially if it is misused. Citizens will pay taxes if the state uses their money wisely and effectively. Government can encourage complicity by showing taxpayers how they benefit. Right now it appears that it's more inclined to use the stick than the carrot.
Source: Financial Mail via I-Net Bridge
