SARS eyes R500 billion windfall: Kieswetter calls for more resources to close tax gap

SARS Commissioner Edward Kieswetter says there is at least half a trillion rand owing to the revenue service that remains uncollected.

Speaking to Parliament’s finance committees today, Kieswetter noted that if SARS' capabilities were bolstered further, it could close this significant tax gap, a figure more than three times the primary budget surplus currently being celebrated by the National Treasury.

THE RISE OF THE ILLICIT ECONOMY
During discussions on the national budget, Kieswetter sounded the alarm over the rapid expansion of illegal trade.

He warned that the growth of the illicit economy is now outstripping that of the formal economy, leaving even more taxes unrecovered.

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As the Commissioner heads into his final months in office, he emphasised that the work of dismantling criminal syndicates is far from over.

The revenue service is currently targeting the following high-risk sectors:

Cigarettes

Alcohol

Fuel

THE TRUE COST OF NON-COMPLIANCE

SARS estimates the total value of the illicit economy to be between R800 billion and R1.2 trillion.

"If you translate that into taxes, it’s between R200bn and R300bn that we are not collecting. So there’s a strong case to do better," Kieswetter stated.

While SARS successfully narrowed the budget shortfall this year, sparing taxpayers from a general tax increase, Kieswetter maintains that the agency is operating below its potential due to financial constraints.

A PLEA FOR FUNDING
The Commissioner argued that with increased investment, SARS could dramatically ramp up collection efforts.

"We are confident when we say SARS is still structurally underfunded and unless we address that, we will not close the tax gap, which, by our estimate at the moment, is R500bn," he said.

Current SARS estimates suggest the fiscus is losing:

R200 billion in VAT payments

R120 billion in Personal Income Tax