No downgrade ... that VAT: Treasury, tax bosses were reassuring but wrong

2017-04-04 05:49

The new finance minister and the commissioner of the tax service put forward a united front at a press conference on the country’s preliminary revenue collection results on Monday.

But the revenue collection results took a back seat, as all eyes were on the previously strained relationship between the South African Revenue Service (Sars) and the Treasury – and certain factual issues didn’t go unnoticed.

New Finance Minister Malusi Gigaba – who has a bachelor of pedagogics (education) and a master of arts degree in social policy, majoring in urban affairs and policy – said he was well-educated and was currently working on his PhD.

My capability to manage the portfolio must not be doubted.

Despite economists believing that South Africa “must be much closer to a junk bond rating than a week ago” , the new finance minister believed otherwise:

Changing an individual is unlikely to result in a ratings downgrade.

Ironically, a few hours later, S&P Global cut South Africa to BB+ or “junk status” on political, institutional uncertainty. S&P maintained a negative outlook on South Africa’s rating.

VAT refunds

The Democratic Alliance came out guns blazing after the event, saying that Sars Commissioner Tom Moyane “potentially misled South Africans” and asked him to disclose the total amount of VAT refunds outstanding as of March 31.

After promising to deal with “the elephant in the room” – Sars is to be investigated by the tax ombudsman on whether “systemic problems” were the reason for widespread delays in the payment of refunds – Moyane failed to disclose the amount owing.

“The commissioner simply cannot claim to have reached the revised target [revenue collection] if there are significant amounts outstanding in VAT refunds, which we know amounted to R19.6 billion,” the DA’s Alf Lees said.

‘It’s all good’

Nonetheless, Moyane and Gigaba ploughed forth with their press conference.

Gigaba explained that he had entered his new post without any preconceived ideas about anyone at Sars, including Moyane – who is a staunch ally of President Jacob Zuma, who fired Gigaba’s predecessor, the respected Pravin Gordhan.

It has been a whirlwind and busy past few days; we had to hit the ground running.

But, he added:

Life will move on after the shock and uncertainty. .

And on his relationship with the Sars commissioner?

I look forward to working with Moyane and Sars officials going forward.

He added that he would “maintain a professional relationship” with Moyane.

I don’t come here with preconceived ideas. I have not been given a hand-out on who to look out for.

Moyane, in turn, said they had a “good relationship” based on professionalism. He added that his behaviour towards Gigaba would be according to a code of conduct attributable to his position.

With Gordhan out of the picture, it looks like the relationship between Gigaba and the Sars commissioner has started off on a strong footing.

Moyane had previously said that Gordhan would not acknowledge him at meetings, and even reached out to Zuma to intervene in their relationship.

Of his relationship with Gordhan, he said that it was no longer an issue to be addressed now that it was off the table.

The fact that the [new] minister asked me to sit with him, to be able to give him a briefing about this organisation, epitomises there is a line of command and accountability.

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December 8 2019