SARS commissioner welcomes R7.5 billion funding to boost tax collection

SARS Commissioner Edward Kieswetter has welcomed the R7.5 billion Finance Minister Enoch Godongwana allocated to the institution over the next three years to build capacity to collect more tax.

Godongwana announced that SARS was allocated R3.5 billion in the 2025/26 financial year and an additional R4 billion over the medium term.

“The investments we make today in SARS will allow the collector the time to make improvements,” he said.

In welcoming the allocation, Kieswetter said SARS would deploy the funding to pursue debt that was owed to it and all outstanding returns.

“It will also be used to modernise and strengthen its technology capability especially the use of data science, machine learning algorithm and artificial intelligence to respond to the sophisticated and aggressive schemes, including dealing with the illicit economy, which has had deleterious effects on our industry with accompanying loss of jobs and constraining our economic prospects.

“It will also be used to enhance efforts to facilitate legitimate trade while also frustrating illicit activities,” he said.

Godongwana has proposed to increase the VAT rate by half a percentage point in 2025 and by another in the following year to bring it to 16% in 2026/27.

He revised the increase from 1%, which had aimed to collect R58 billion in revenue, to just R28 billion on the proposed tax increase.

Godongwana said the decision on tax increases - which is aimed to fund the spending pressures in health, education, transport, and security - was not taken lightly.

“We are aware of the fact that a lower overall burden on tax can help to increase investment and job creation, and also unlock household spending power.

“We have, however, had to balance this knowledge against the very real and pressing service delivery needs that are vital to our developmental goals and which cannot be further postponed,” he said.

Kieswetter said the proposed tax policy measures in the 2025 Budget will have a net revenue impact of R28 billion for the fiscal year 2025/26 and R44.2 billion for the fiscal year 2026/27.

“While we have seen encouraging progress at SARS, we remain painfully aware that much more has to be done to address the tax gap and, in particular, modernise SARS to respond to illicit economic activities and tax crime, aggressive tax planning, and many other instances of non-compliance,” he said.

“All these mean that there are vast amounts of tax revenues that remain uncollected. Our efforts in this regard have to be stepped up with determination and unyielding focus,” Kieswetter added.

He was confident that the 13 000 SARS employees will do all in their power to meet this year’s revised revenue estimate.

Meanwhile, Godongwana and Kieswetter appeared to have smoked a peace pipe following remarks the former made at a media briefing following the postponement of the Budget on February 19.

Godongwana was heard at the end of the briefing in discussion with Minister in the Presidency Khumbudzo Ntshavheni and National Treasury director-general Duncan Pieterse discussing a question posed in connection with an article where Kieswetter was quoted as saying R800 billion remained uncollected and that it provided an opportunity to collect more taxes due to the state.

Godongwana had indicated that Kieswetter’s remarks he described as rubbish made him angry and that he did not know there was a R3.5 billion allocation made for SARS to enhance revenue collection and improve tax compliance.

Speaking during a briefing before the tabling of the Budget, Kieswetter said he had spoken in good clarification sessions with Godongwana privately.

“My conscience is clear. What I have spoken about is a consistent narrative and in line with the mandate of SARS,” he said.

“We met three times. There is no issue between myself and the minister,” Kieswetter said.

Godongwana confirmed the meeting with Kieswetter where they looked substantially at SARS and that there was absolutely nothing between them.

“I think as far as I am concerned, both of us understand that is behind us. We are focusing on the job at hand,” he said.

mayibongwe.maqhina@inl.co.za