'Why fix what isn't broke?' - Judge Davis on SARS restructure under Moyane
Judge Dennis Davis told the Nugent Commission of Inquiry on Friday that he never saw the need for the restructuring process at the South African Revenue Services (SARS) undertaken by international consulting firm Bain & Company in 2015, under suspended commissioner Tom Moyane.
“All you needed was to tinker there a bit and we were home, why do you need to fix something that is not broke,” Davis, the chairperson of the Davis Tax Committee testified.
The Nugent Commission of Inquiry is probing the administration and governance at SARS and over the last week has heard testimony from SARS officials and Treasury about the slide in compliance and revenue collections since the 2015 Bain restructuring process.
Davis said he was appointed to head up the advisory committee into SARS in 2014, by then-Finance Minister Pravin Gordhan, to update the process of the Katz Tax Commission twenty years earlier.
He said they had never foreseen the need to be given subpoena powers when he was appointed but the relationship with Moyane started to fray when he saw the Davis Tax Committee as the “enemy”.
He expressed his frustration with Moyane saying the committee wasn’t given access to key data and was therefore advising ministers of finance about tax policy in the dark.
'Disastrous' Bain report
Davis said the recommendations in the Bain report were “diametrically opposite” to their advice.
“There were disastrous consequences because of the Large Business Centre Collapse, all kinds of problems in corporate taxes”.
SARS fell short of its target by R48.2bn in 2017/2018 financial year and Treasury officials testified on Wednesday that this was part of the reason behind the value added tax (VAT) increase to 15% on April 1.
Davis said that the causes for the SARS under collection are complex and a decline in economic growth in recent years as well as a slippage in tax morality- caused by broader levels of corruption- not just allegations at SARS, were partly to blame.
He agreed with Finance Minister Nhlanhla Nene that an independent board should be appointed to oversee SARS and advise on operational matters.
Treasury deputy director-general Ismail Momoniat also suggested on Wednesday that a board in the manner of the South African Reserve Bank (SARB) chaired by the governor play oversight over the revenue agency.
Davis said SARS was ruled by a “culture of fear” under Moyane and senior staff members who spoke to him were afraid to come out publicly about their concerns.
He said that no single private corporation as large as SARS could be run by one person and while a board like the SARS model isn’t a perfect solution, it would be “better than what we have now”.