CAPE TOWN South Africa (Xinhua) --
South African Finance Minister Malusi Gigaga
confirmed on Tuesday that a Commission of Inquiry will be
established soon to look into the South African Revenue Service
(SARS) following a shortfall of billions of rand in tax revenue.
President Jacob Zuma has acceded to his request for an urgent
establishment of an inquiry into the tax administration and
governance of the SARS.
“The Commission will
be established soon and its details will be released in due
course,” Gigaba said.
The minister said he
has informed SARS Commissioner Tom Moyane of this proposed
inquiry and the commissioner has expressed his support for it
and willingness to cooperate.
Gigaba announced in
the Medium Term Budget Policy Statement last month that South
Africa faces a staggering revenue shortfall of 50.8 billion rand
(about 3.63 billion U.S. dollars) for the current financial
The SARS is blamed
for under-collection of revenue.
for the under-collection of revenue by SARS must be
investigated, Gigaba said in his Tuesday statement.
The inquiry will
also look into what steps need to be taken to improve
performance management systems at SARS to improve its capacity
to collect revenue, said Gigaba.
Whilst the economic
cycle is the most likely and significant factor driving lower
revenue-collection, other factors could also be at play, like
weakening tax morality and challenges facing tax administration,
according to Gigaba.
Whatever the reason
for such 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 South Africa’s credit rating and growth
prospects, Gigaba said.
Gigaba has revealed
that the gross national debt will shoot up to 3.4 trillion rand
(about 243 billion dollars), or 60 percent of GDP by 2020 as the
government is forced to borrow more to fund policy
Also on Tuesday, the
opposition Democratic Alliance (DA) welcomed the proposed
inquiry into SARS.
The inquiry should
also look into other issues that have plagued the SARS for long,
the DA said.
These include the
mass exodus of senior and effective employees; reports of
unlawful bonuses paid out to SARS executives; undue delays and
wrongful obstructions to tax refunds, and factually incorrect
communication surrounding people’s tax returns, according to the