By Abel Semosa
This opinion piece aims to clear some of the things regarding Thabo Mbeki’s remarks on the South African Revenue Service and the Nugent and Zondo commissions’ findings on the matter of Sars versus former commissioner Tom Moyane and former president Jacob Zuma, because most of it is misleading to the public in general.
However, it must be noted that this article does not absolve any wrongdoings but sets the record straight about Sars’s performance under the stewardship of Moyane.
Former president Mbeki, at his annual Unisa lecture, has thrown shade on how Zuma, as the then-leader of the government, had been instrumental in trying to destroy Sars.
Mbeki also cited the Nugent and Zondo commissions to further collaborate his allegations against Zuma. He mentioned that Sars was an outperforming institution, with a remarkable reputation known worldwide. However, Zuma’s tenure had been marked state capture and destabilising Sars.
South African mainstream media and the Zondo Commission take citizens for fools. Moyane, who was appointed by Zuma, had done a remarkable job during his tenure as Sars commissioner and, for that, he deserves recognition. Moyane was the first to collect a tax revenue of more than R1 trillion.
However, nobody commended him for this tremendous achievement. Instead, they kept detracting from his achievement, in the fear that his achievement would contradict their propaganda. How could a collapsed institution like Sars, they claim, have collected tax revenue of more R1 trillion for three-consecutive financial years? Unless, we are missing something.
Sars, in its quarterly report and Annual Performance Plan with the finance standing committee in 2016, noted that it had continued to excel in its core mandate and had collected more than R1 trillion for the first time. It had also continued to improve its cost-to-revenue ratio, with R598 705 million collected in 2009/10, compared to the R1.435 trillion estimated for 201/19. Can we call that a failure?
A report by The Platform to Protect Whistleblowers in Africa (PPLAAF), “The capture and restructuring of the South African Revenue Service”, has presented a false projection of Sars revenue tax collection through a graph.
The report stated: “As a result of restructuring, Sars has been experiencing massive shortfalls in tax revenue collection. This shortfall also seemingly resulted in the first increase in VAT in 2018 since democracy in 1994, from 14% to 15% to try to cover the shortfalls in tax collection.”
The statement from the PPLAAF report has projected false and misleading information regarding Sars’s performance under Moyane.
The facts are:
• For the 2014/15 fiscal year, Sars collected R986.4 billion, which is a 9.6% growth in total revenue from 2013/14. This is R7.4bn above the revised estimate announced in the February 2015 Budget.
• The collection of more than R1 trillion in the 2015/16 financial year helped reduce the country’s deficit. This also contributed to South Africa avoiding a rating agency downgrade. Sars collected R1 0697 trillion in taxes. This surpassed the R1 069 trillion target by R154.07 million set out in the year’s Budget speech by the then-finance minister, Pravin Gordhan.
• Despite South Africa facing declining gross domestic product growth, revenue collections in 2015/16, Sars outperformed the economy. representing a growth of 8.5% from the 2014/15 fiscal year and increasing the estimated tax to GDP ratio, from 25.8% in the 2015 Budget to 26.3% as projected in the 2016 Budget.
• For the second year in a row, Sars collected R1.367 trillion in tax revenue. The preliminary outcome for the 2016/17 financial year, net of refunds of R222.4bn, is therefore R1.144 trillion.
• In the financial year 2017/18, the R1 trillion mark was reached on February 22, 2018, making it the third year in a row that Sars reached the milestone. Moyane said the achievement was a testament to the organisation’s commitment to reaching the increased revenue target of R1.217 trillion that the finance minister announced in his Budget speech.
According to Sars, under Moyane: “Sars has never had to collect more than R1 trillion before. Achieving the target of R1 trillion is indeed momentous and a first for South Africa and Sars. Key to this accomplishment is the enhancement of our operating model which started transforming Sars into an organisation that is adapting to a changing global environment and refocusing the organisation on the execution of its mandate – that of collecting all revenue that is due to the fiscus.”
Sars Operating Model Restructuring and Rogue Unit
The restructuring of the Sars operating model within the institution was met with resistance. Moyane was alleged to be on a mission to collapse the institution and, under his leadership, it is alleged the institution had lost integrity. A US consultant company was contracted to strategise and oversee the restructuring process. However, opposing forces have argued that the institution didn’t need to be restructured as there was no problem that required the institution to be restructured and fixed. Well, that’s true, but not all restructuring is about fixing a problem; it can be for improving the efficiency of the institution.
Despite the negative comments, Sars did well and collected more than R1 trillion in tax revenue.
Judge Raymond Zondo alluded that: “In reality, there was no need for consultants, let alone a radical overhaul of what was then a world-class institution. The ‘profound strategy refresh’ was just a pretext for the assumption of control over Sars for ulterior purposes.”
Judge Zondo made it look like it had been wrong to restructure Sars. According to him, Moyane and Zuma had ulterior motives, yet Sars had continued to excel on its core mandate and collected more than R1 trillion tax revenue. It was that radical overhaul that had made it possible to collect such an amount of tax.
Judge Zondo failed to acknowledge and recognise Moyane for the commendable work he had done. He intentionally turned a blind eye to that. What ulterior motives could Moyane and Zuma have had? There had been an absence of looting at the institution and no proof that Moyane had collapsed the institution.
However, there was proof that the new operating model at Sars was functioning perfectly. One of the keys to the accomplishments of Sars is the enhancement of the Sars operating model, which started the transformation process of the organisation and brought about an additional R12bn in the first six months following its implementation.
Mbeki when addressing the crowd at Unisa, said: “Now, some of us, after reading the Nugent report, one of the things that stood out was the absence of looting. Here is a state agency that collects billions of rand, and you would think one of its challenges would be theft, but the intention was not to steal but to destroy the institution.”
The Nugent and Zondo commissions, in their reports, have projected only a storyline that sounds like Moyane and Zuma had a sinister plan to collapse Sars, with no proof to back the allegations. Judge Zondo automatically believed every testimony at the commission and went on to write reports on every testimony of everyone who was against Zuma and Moyane. Their presence at the commission did not make any difference because it seemed like by then, the conclusions had been drawn.
At the commission, when he was cross-examined by Dali Mpofu, Pravin Gordhan admitted that he did not have proof of the allegations that Moyane wanted to capture Said. He maintained that there had been a pattern of behaviour showing how Moyane had repurposed the institution to further the state capture agenda and evade accountability.
However, when Zuma had done the same, following patterns against his nemesis, he was called a liar or conspiracy theorist and nobody believed him, including Judge Zondo. Zuma has repeatedly mentioned that there were forces that wanted to destroy his image and they were colluding with international agencies to do so.
The governance issues projected in the Nugent and Zondo commissions’ reports refer to labour-related disputes between Moyane and other Sars employees. The shutdown of the “Rogue Unit” within Sars, which was alleged to have been led by Gordhan, had erupted in a civil war between Moyane and Gordhan. The tension between Sars and the office of the National Treasury became public knowledge but it automatically started after the disbandment of the Rogue Unit.
It must be noted that Gordhan’s attitude towards Moyane was the same attitude he had towards Dudu Myeni, the former SAA chairperson. One could say that Gordhan and Zuma had many differences, hence Moyane and Myeni never got along with Gordhan either.
Mbeki’s statements on Sars serve as a strategy for de-campaigning Zuma’s newly registered political party, the Umkhonto We Sizwe (MK) Party.
Not so long ago, Mbeki was attacking the ANC and its leadership but, now, he publicly confirmed that he would be campaigning for the ANC in the coming elections.
He said the ANC, since its adoption of the renewal resolution, had done nothing tangible to implement it. Mbeki has been vocal about Ramaphosa’s leadership and how little has been done to finalise the social impact with social partners to grow the economy, create jobs and end poverty.
Has Mbeki lost his integrity? And campaigning for the same party he declared the number one enemy of the people of South Africa?
And the worst part, he used the Nugent and Zondo commissions’ reports to discredit the opposing MK as part of the campaigning strategy. I’m adamant that he knows that the information in the reports is propaganda and misleading to de-campaign Zuma and Moyane. As part of restructuring Sars, Zuma did not use Bain & Incorporated Company Inc for only Sars; its plan went beyond restructuring parts of state-owned entities and the economy in general. A smear campaign against Zuma was inevitable. Mbeki has used the same method used by Zuma's nemesis to de-campaign the MK for the incoming elections.
Mbeki is the last person who should be judging Zuma for parting ways with the ANC. When he lost against Zuma in Polokwane, Mbeki has assisted in formulating the Congress of the People’s policies.
To conclude, Sars never had the biggest shortfalls under Moyane; it was a narrative used by opposing forces to remove him and Zuma from the office, the reason being that no stone was left unturned when it comes to tax revenue collection. Instead, Sars excelled and was able to make a history by collecting more than R1 trillion in tax revenue. So, Mbeki is using the same strategy to de-campaign against the MK party.
Semosa is a political analyst and writer.