Last week’s relaunch by South Africa’s tax authority of the Large Business Centre (LBC), modelled as a onestop shop for high-yielding tax collection, has been identified as the vehicle to steer the SA Revenue Service (Sars) in the right direction once again. It was initially instituted when Trevor Manuel was still minister of finance and Pravin Gordhan commissioner of Sars. The current commissioner, Edward Kieswetter, promoted the future of the new LBC by dissecting its past. Reflecting on how the initial centre was dismantled as part of the state capture years, Kieswetter said: “The loss of human capital since 2014 has been massively debilitating, triggering an exodus of core competence that led to the loss of more than 3000 employees, many of them in key positions.” Kieswetter said at least 115 specialised auditors tasked with investigations and compliance, including customs officials, had resigned or retired during the last few years of corruption. “The tragedy of state capture,” he lamented, was that public and private sector interests “deliberately sought to render the organisation incapable of fully delivering on its mandate.” Had the LBC been left alone to build on Manuel and Gordhan’s initial vision to become a one-stop shop for about 9000 companies with a turnover of higher than R250 000, the collector’s own finances would probably be in a much healthier state. Yet Sars has has already indicated that a shortfall of R16 billion can be expected for the current tax season – a figure touted prior to Finance Minister Tito Mboweni’s medium-term budget speech earlier this week. At least it’s not as bad as the R57 billion shortfall reported for the previous tax season. In the meantime Sars also has “a debt book that has ballooned to R175 billion”. Yet Kieswetter, who was called back from retirement to steer Sars to calmer, hopefully more prosperous waters, said that much had already been done to turn the collector around. One aspect of this involved adding 875 high net worth tax payers to the authority’s registry, yielding an expected R2.4 billion in additional revenue. It was through such concentrated collection, Kieswetter stressed, that the new LBC was expected to continue with its original intent identified. That initial iteration of the LBC, though, was 15 years ago. Kieswetter mentioned “that the world was a very different place back then. We didn’t have Facebook, Airbnb and Uber. Now we do”. Considering the altered financial environment, the new LBC has adapted its scope. The turn-over bracket for companies wanting to benefit from the LBC has been pushed to R500 million. However, multi-national interests trading in South Africa are exempt from this barrier. In order to use the LBC to boost revenue collection over the next five years, Kieswetter has identified three primary objectives that will be implemented to give the centre the necessary initial momentum. These include “dealing with the 30-odd recommendations” identified by the Nugent Commission that investigated state capture machinations at Sars, targeting “low hanging fruit or quick wins to boost morale”, and “re-envisioning or re-imaging Sars”
INSERT: One of the casualties of this corrupt project was the dismantling of the LBC. – Edward Kieswetter