The finance minister on 07 November announced that he had approached the president to request the urgent establishment of an enquiry into the tax administration and governance of Sars, to which the President had acceded. The Commission, to be established soon, will assess what factors are responsible for the under-collection of revenue by Sars. In addition, it will explore what steps need to be taken to improve performance management systems at Sars to improve its capacity to collect revenue.
The Medium-Term Budget Policy Statement (MTBPS) recognised that whilst the economic cycle was the most likely and significant factor driving lower revenue-collection, other factors could also be at play, like weakening tax morality and challenges facing the tax administration. Whatever the reason for the shortfall, the risk of under-collection of revenue impacts directly on the size of the future budget deficits, and hence on the sustainability of the projected debt-to-GDP trend, and directly on our credit rating and growth prospects.