Business 14.6.2018 08:40 am

Acting Sars commissioner’s 90-day term runs out soon

But Moyane’s disciplinary process will likely delay permanent appointment.

A picture is worth a thousand words.

In this case, the picture is the podium of the auditorium at Linton House in Pretoria, home of the South African Revenue Service (Sars).

It’s June 4 and on the podium is Sars Acting Commissioner Mark Kingon, accompanied by acting chief officer for business and individual tax, Fabian Murray, and acting chief financial officer Johnston Makhubu.

All acting in their various roles.

Kingon and this team were addressing the media on the upcoming tax season that starts on July 1, and which has been shortened by three weeks. His appointment in the position on March 20 followed a tumultuous period at the revenue authority, which resulted in a deterioration in tax compliance and an exodus of senior staff. The culmination has been the suspension of Commissioner Tom Moyane amid allegations of misconduct. Moyane, an appointee of former president Jacob Zuma, has previously also been accused of assisting the state capture project, a claim he denies.

Kingon is well-respected in tax circles. In a sense, he was born into the Sars family (his father was also a commissioner at the Revenue Service). And he has spent over three decades at the entity. But with recent developments he is under significant pressure to turn things around at the struggling entity, even though he only holds an acting position.

Monday (June 18) will mark 90 days since Kingon was appointed acting commissioner. According to the Sars Act, no employee may serve as acting commissioner for a period longer than 90 days at a time.

Although National Treasury did not respond to a request for comment on the extension of Kingon’s term by time of publication, it seems likely that he will be appointed to the post for at least another 90-day period to ensure continuity.

Treasury was previously criticised after former acting commissioner, Ivan Pillay, continued servicing in the position even though there was no official announcement that his term was renewed, says Piet Nel, head of the School of Applied Tax at the South African Institute of Tax Professionals.

Interestingly, the minister of finance appoints an acting commissioner, while a permanent appointment can only be made by the president. The Davis Tax Committee has previously raised concerns about the president’s “unfettered discretion” to appoint the Sars head (in light of Zuma’s appointment of Moyane) and recommended that the commissioner should rather be appointed in the same vein as the public protector or by the minister of Finance directly to improve transparency and accountability. The issue is yet to find its way into tax legislation, but Zuma’s removal as president may mean that this is no longer a priority.

With Moyane’s disciplinary process only getting under way now, the president is not in a position to make a permanent appointment, says Kyle Mandy, tax policy leader for PwC South Africa.

“The bottom line is that Tom Moyane remains the commissioner. He has not yet been removed from that post and until such time as he is removed from the post, you cannot appoint a new [full-time] commissioner.”

Moyane was initially appointed commissioner in September 2014. In terms of the Sars Act, a commissioner’s term, although renewable, may not exceed five years. While the disciplinary process is expected to take some time, President Cyril Ramaphosa seems adamant that Moyane has to be removed sooner rather than later. This suggests that in a ‘worst-case scenario’ Moyane’s official term will come to an end in September 2019.

Yet he seems determined to return to Sars and is pulling out all the stops to fight his suspension. An industry insider says there is concern that Moyane could go back to Sars.

“The fact that he is so aggressive implies that he is confident that he will go back,” says Mandy. “The people he appointed into top positions are still there.”

When a new commissioner is finally appointed it is probable that Moyane’s appointees will be ‘moved’, which could trigger litigation.

While the tax community will likely support Kingon’s interim appointment becoming permanent, the commissioner has historically been a political appointment rather than a technocrat.

Pieter Faber, senior executive for tax and legislation at the South African Institute of Chartered Accountants (Saica), says that of the last three commissioners appointed, only one was an internal appointment. In making an appointment, the president will have to weigh up the benefit of a person with integral knowledge of Sars and its current culture against the benefit of an outside person who may not suffer from any conflicts or loyalties and who can take Sars strategically to new heights.

“We do however hope that whoever the president appoints will have as his or her only prerogative making Sars world class and serving the interest of the country, without fear or favour to political interests,” Faber says.

Former deputy finance minister Mcebisi Jonas’s name has previously been mentioned as a preferred candidate, but he may consider the post a step down. Moreover, Jonas seems to be venturing into the private sector. He took up a position as non-executive director at MTN on June 1. Then again, finance minister Nhlanhla Nene joined Allan Gray as a non-executive director after Zuma controversially fired him, but returned to public service afterwards.

At this stage however, any comments around the appointment of a permanent commissioner are speculation and it seems unlikely that the Moyane situation will be resolved in the next three months.

“By the time all of this [the disciplinary process] is done and dusted, he might be at the end of his contract anyway,” says Mandy.

Whatever the outcome, it’s important that stability be created at Sars as soon as possible. It needs to restore its credibility and trustworthiness among taxpayers, particularly as economic growth continues to disappoint and the fiscal situation remains weak. This will require strong leadership. Kingon is acutely aware of this and has already announced new initiatives that could go some way towards fixing the situation.

To ensure stability and turn the ship around it’s important that competent individuals take up the various posts permanently. There should be certainty and continuity. Moyane’s disciplinary hearing could delay the process indefinitely.

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