The South African Revenue Service (SARS) has lost about 3 000 staff since 2014, half of them being technical people.
This was revealed by SARS commissioner Edward Kieswetter, addressing the audience during a post-budget expert panel discussion hosted by PwC last Friday.
Kieswetter indicated the revenue service had lost 250 auditors across the organisation, in the large business centres. It lost over 100 staff specialised in the areas of transfer pricing and technical specialisations, including 60 enforcement officers in customs as well as over 200 debt collectors, he noted.
The actual state of SARS is significantly worse than what the Nugent Commission of Inquiry’s report found it to be, he said. “We have dumbed-down the organisation to the point where you want to cry.”
The tax collector’s IT infrastructure and leadership challenges played out in public during the Nugent Commission of Inquiry into tax administration and governance at the revenue service in 2018.
The situation was made worse when the former chief officer for SARS’s digital information services and technology unit made headlines when she botched an interview on SABC's TV breakfast show, Morning Live, during which she couldn’t explain the organisation’s state of IT infrastructure or a clear way forward.
The commission recommended decisive and experienced leadershipto take the organisation forward and return SARS to its former IT glory.
Getting down to business
According to Kieswetter, the first three months in his role as commissioner was spent assessing the actual state of the organisation, visiting 90% of the staff across offices in the country.
“The first issue was to address the integrity issues, and we’ve substantively done that as many of those leaders have left. The second issue that needed to be addressed was suitability for roles.
“What I did was remove the top-level so-called exco, which was about 12 people, and directly worked with about 50 or 60 leaders, to share the message and bring some alignment. This also helped in the assessment of people for the suitability of their roles.
“In that period, we delivered a new vision for SARS, a new strategy for SARS – those documents will be tabled in Parliament soon. We then designed a new organisational model.
“You’ll be pleased to know we spent about R150 million on Bain, to create a fake operating model that destroyed the organisation. You’ll be pleased to know the new operating model cost nothing.”
The tax collecting agency now has clarity on its strategy, he added. “Structure follows strategy because now we know what organisational structure we are going to have.
“We are now in the phase of matching people to more suitable roles, and recruiting for new roles.”
Enabling environment
Since joining SARS in May last year, Kieswetter has constantly emphasised the need to boost the organisation’s technological capacity and deriving insights from data.
According to the commissioner, the revenue service has to create an enabling environment, and it is focusing on increasing the use of data.
“We cannot live in a world where we make an old lady, who simply wants to submit her return, wait in a queue for six hours. It is just unethical to do that and that’s what we’ve done,” he emphasised.
In order to address this, SARS, for example, did an elementary artificial intelligence project using data already at its disposal, to determine how many people own multiple properties but don’t disclose that information.
He explained that on a small sample, the organisation was able to raise R500 million in the last few months because it detected a practice of VAT abuse of about 600 VAT entities. These entities registered with no intention to trade.
“In 2017, the year-on-year VAT growth was about five-and-a-half percent, and then we went into over 20% VAT growth. We’ve brought that back now, not by manipulating it but addressing VAT abuse.
“We have prevented R600 million of VAT fraud since we’ve looked harder at those areas of abuse, and as we improve and expand the use of data, we will also be able to provide a seamless service for ordinary taxpayers.
“Our vision is that over the next five years our system will improve to the point where an ordinary taxpayer, which represents millions of South Africans, who has one single employer and all of their expenses and incomes go to the employer through the payroll, shouldn’t have to submit a return.
“They should get a letter from us saying: ‘Thank you very for your contribution; according to our records, you have completely fulfilled your obligation and if we don’t hear from you in 72 hours – your matter is done.’ Non-filing is one of our visions,” he concluded.
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