Transcript Slide 1
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LEADING THE WAY IN TRANSFORMATION:
THE SARS SUCCESS STORY!
Pravin Gordhan
Commissioner: SA Revenue Service
Presentation by
PRAVIN GORDHAN
Commissioner of SARS
to
The 2nd
BANKSETA International Conference 2004
SARS Mandate
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The SARS Mandate
The organisation is tasked to efficiently and effectively collect -
• all national taxes, duties and levies imposed in different pieces of
taxation legislation
• all revenue that may be collected in terms of any other legislation, as is
agreed between SARS and the organ of State or Institution
SARS is also responsible for the control over the import, export, manufacture,
movement, storage or use of certain goods
The organisation is also responsible to the provide advice to the Ministers of
Finance and Trade and Industry to on all revenue and customs matters
The Economy
1984-1993
1994-2003
Growth a mere 1% a year
Growth around 3% a year
Investment shrinks 2,9% a year
Investment expands 4.7% a year
Inflation averages 14,3%
Inflation down to <6%
Deficit up to 9.3% in 1993
Deficit down to around 3%
Fin account net outflows of R46,1 bn Fin account, net inflows of R169,6 bn
Unprecedented ratings upgrades
Investment boycott
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Basic needs and social services
1.6 million houses built
700 new primary health clinics built
Electricity to 4 million homes
4.5 million children benefit from primary school nutrition programme
Grant beneficiaries increased: 2.9 million to 7.4 million
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SARS Profile
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The SARS profile
Collects approximately 90% of the government’s revenue, in excess of R300 billion in
direct and indirect taxation
Administers 22 tax types
Deals with over 5 million taxpayers/ taxpaying entities
Operates from over 100 sites nationwide
Employs over 14 000 staff
Administration costs <1.5% of revenue collected (developed countries 2%; developing
countries 4-5%)
SARS VOLUMETRICS
1,4 Million
SACU Movements
1,7 Million
Import
transactions
1,4 Million
Export
transactions
1,3million
Corporate Taxpayers
536 281
Vat vendors
136 000
3 000
Bonded
Warehouses
14 000 SARS
Employees
Registered
Traders/Operators
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4 Million
Individual taxpayers
1 451
Manufacturers of
excisable products &
4 licensed distributors
3 000
Rebate Manufacturers
274 764
PAYE Employers
REVENUE PERFORMANCE
R 'billion
1998/9
1999/0
2000/1
2001/2
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2002/3
2003/4
Target
179.2
193.9
213.6
236.8
268.5
310.0
Collections
184.8
201.4
220.3
252.3
282.2
302.4
5.6
7.5
6.7
15.5
13.7
(7.6)
Above/under target
Total additional collections
(10 year period)
50.4
SARS Performance
Stable tax regime
Fiscal stability
Increased revenue yield (exceeding revenue targets)
Significant tax relief (R73 billion)
Broadening the tax base
Improved service
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OUR LEGACY
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11 separate departments within the Department of Finance.
Declining performance against revenue targets
Unwieldy organisation structures, many layers of management
Procedures were highly bureaucratic, manual and clerical in nature
Weak and outdated physical infrastructure
Wholly inadequate technology infrastructure – disparate line of business
systems
Low staff morale with minimal representivity, limited career opportunities and
lower than market related remuneration
Prevalence of internal fraud and corruption
OUR LEGACY…The SA Climate
The South African compliance climate reflected
Low tax literacy vs high tax complexity
Low tax morality
Negative perception of the tax system and administration
Weak protection of our borders against illicit trade
Preferential tax treatment
• Certain sectors
• Greater ability to distort tax burdens among the affluent
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PRINCIPLES OF A GOOD TAX AND CUSTOM ADMINISTRATION
(OECD)
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A good tax and customs administration should….
1. Apply tax laws in a fair, reliable and transparent manner
2. Outline and communicate to taxpayers their rights and obligations as well as
the available complain procedures and redress mechanisms
3. Treat enquiries, requests and appeals from taxpayers in an accurate and timely
fashion
4. Provide an accurate and dependable information service
5. Ensure that compliance costs are kept to a minimum
6. Where appropriate give taxpayers’ opportunities to comment on changes to
administrative policies and procedures
7. Use taxpayer information only to the extent permitted by laws that limit their
use to tax officials except under compelling circumstances
EVOLUTION OF SARS
Introduced modern employment practices
Standard job descriptions and job specifications
Career paths
Competitive remuneration
New collaborative approach with Unions
Redefined strategic direction of SARS
Vision
Mission
Values
Taxpayer Charter
Code of Conduct
Compliance Model
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EVOLUTION OF SARS
Refocused efforts on enforcement
Increased audit capacity
Introduced new tools and techniques
Rolled out national campaigns addressing high risk areas
Siyakha “We are Building”
Transformation programme launched
Commenced with organisation wide diagnosis
Implementation of pilot in Kwa-Zulu Natal region
Established centers (Taxpayer Service; Assessment; Enforcement; Customs)
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EVOLUTION OF SARS
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Appointment of a new, representative management team
Provision of modernised infrastructure
Streamlined and standardised business processes – supported by new policies,
procedures and skills
Provided a dedicated frontline environment for taxpayers
Focused, high visibility enforcement interventions addressing high risk
industry sectors and taxpayers
SIYAKHA PROGRESS
Successful implementation in Kwa-Zulu Natal and Western Cape (CBD)
Ongoing transformation in Western Cape and Gauteng
9 additional offices being converted to the Future mode of operation.
This platform has enabled us to identify further process improvements which
are being implemented
Concentration of assessment activities resulted in improved turnaround times
Over 2400 staff have been trained in service and functional expertise
To date, over 3000 staff have either been appointed in new positions or
absorbed in terms of the Siyakha protocol
Employment Equity has been improved
To date more than 20 SARS locations (excise, tax and customs) have been
improved
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SARS LBC
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• Launch of SARS Large Business Center - 2 September ‘04
• The LBC Business Model:
Developing enhanced
Relationships with our
corporate taxpayers
based on intimate
knowledge derived from
industry sector
specialization
Dedicated Sector Managers supported by
Taxpayer Relationship Managers for each of
the following sectors
respectively:
• Financial Services
• Mining
• Manufacturing
• Information, Communication &
Technology
• Retail
• Primary (Agriculture, Forestry
Logging)
• Construction
• General & Diverse Holdings
LBC Service Model
A Convenient one stop service for
Providing world-class
operational excellence with
one-stop - single point of
entry for all tax types and
effective Administration
& Resolution processes
cost effective filing and processing
of all tax submissions, as well as
the efficient management of
accounts, registration of new
taxpayers or changes in taxpayer
status
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Noteworthy achievements
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Consistently exceeded revenue targets despite undergoing organisation wide
transformation
Successfully introduced challenging legislative changes eg. RBT, CGT
Shifted the compliance culture in SA through targeted, visible enforcement
Expanded the business to take on new tax products eg. UIF and SDL
Made initial strides in entrenching a service culture
Provided dedicated service areas
Established a SARS Service Monitoring Office
Released a draft Taxpayer Charter which will entrench service standards
Introduced an online customer feedback system to gauge service satisfaction
Implemented dispute resolution procedures for speedier resolution of
administrative issues
AT A GLANCE…10 years of delivery
BEFORE
AFTER
Low Revenue
Significantly increased revenue
collections
Weak customs
Inefficient processes
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Visible and more efficient customs
Ineffective enforcement
More efficient, streamlined and
integrated processes
Poor compliance
Visible and more efficient enforcement
Poor technology
Increased compliance culture
Low skills
Enhanced and stable technology
platform
Enhanced focus on development of
technical and management skills
A REALITY CHECK
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Change is ongoing
We’ve achieved a lot…but there are still many challenges that remain
Challenges we are facing
Revenue administration as a suitable response to the dualistic nature of the
South African economy
• Widen the net to include both economies; reduce the tax gap
Building fiscal citizenship to ensure a climate of sustained compliance
Achieving a robust administrative machinery that supports revenue growth in
a highly effective and efficient technology enabled organisation
Further transforming the organisational culture to reflect greater
professionalism, service and integrity
THE NEXT WAVE OF TRANSFORMATION
A vision for 2010
Individuals
Business
SMEs and large corporates
Key shifts
Inward administrative view to outward taxpayer view
Reactive to proactive engagement
Manual to automated
Compliance strategy
Institutional transformation
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ANTICIPATED OUTCOMES
Smarter SARS
More efficient
Electronically enabled
Visible SARS
Touching all segments
Tax officers in the field
Increasing access to taxpaying community
Responsive SARS
Better Service
Swift detection and deterrence of non-compliance
Learning organisation – leadership and technical capability
These outcomes translate into sustained compliance and delivery on revenue
targets
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RECIPE FOR OUR SUCCESS…
Overall fiscal reform – tax policy and tax administration changes in tandem
Political support of Minister of Finance
Administrative autonomy brings greater flexibility and control
Creat e a vision for the future
Transformational passionate leadership – actively driving change and
instituting a new way
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RECIPE FOR OUR SUCCESS…
Create a critical mass of change drivers
Evolutionary change but revolutionary thinking – sustain the change.
Implement change in manageable chunks
Willingness to engage with all stakeholders and across all functional
areas of the business to achieve a holistic robust solution
Integrated process view and enhanced business knowledge
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Thank You