Will ANC account for alleged tax fraud linked to employee salaries?

The South African Revenue Service (Sars) must get tough with the ANC over the party’s alleged R17 million tax bill trickery, with experts saying this will drive home the sting of the legal implications of non-compliance and in turn inspire tax morality.

Insiders allege that the party is sitting on a massive tax bill, which includes millions of rands in pay-as-you-earn (PAYE) tax, which was deducted from salaries, but not paid to Sars. In terms of the Income Tax Act, this action is a criminal offence punishable by prison time.

Reports suggest that the cash-strapped ANC had an R80 million tax bill when Paul Mashatile took over as treasurer-general in December 2017, and that the party reportedly owed a further R140 million in provident-fund debt.

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To date, Mashatile has reportedly paid over R100 million servicing this debt, but the bill remained high because of the interest.

ANC must be treated like any other ‘non-compliant organisation’

“The perception is there that there is no toughness against non-compliance, which is not good for tax morality. The public must see how Sars deals with this matter, that it is costly to be non-compliant,” tax attorney at Tax Consulting South Africa, Jean du Toit. said.

He said if a company is non-compliant, Sars has options to go for the company or the directors personally. In the case of an organisation such as the ANC, Sars could go after the organisation itself as a collective, or its representatives.

“There will be a designated person to ensure that the organisation meets its tax obligations,” he said.

Economist Patrick Bond said though he was unsure who should take responsibility for the party’s tax woes, he was fascinated by the apparent roles of Luthuli House leadership in this tax saga.

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“…because the treasurers of the party were not only Dr Zweli Mkhize before 2019 – and his own patronage through friends’ tender deals [on communication contracts] – have come to light; but also now Paul Mashatile… both Ramaphosa allies. Of course (secretary-general Ace) Magashule or (deputy secretary-general Jessie) Duarte should bear current responsibility,” he said.

Bond said former secretary-general Gwede Mantashe should also take responsibility if this practice dated back to 2017 and earlier.

Opposition calls for all to be equal before the law

The DA, meanwhile, welcomed Sars’ garnishing the R17 million allocated to the ANC by the Independent Electoral Commission (IEC) for the first quarter of 2021-2022 as partial payment of its debt.

Geordin Hill-Lewis, the party’s spokesperson on finance, urged Sars to continue to uphold the constitutionally enshrined principles of transparency and accountability.

“It is imperative that Sars act without any fear or favour in reclaiming any and all outstanding monies from the ANC. In terms of the Income Tax Act, it is a criminal offence punishable by prison time for anyone to wilfully and without justification withhold funds owed to Sars,” he said.

According to Hill-Lewis, as the withholding agent for its employees’ PAYE taxes, the ANC, just like any other employer in SA, was was directly liable for any tax debts on its employees’ names that is incurred due to its own negligent or possibly fraudulent action.

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“Any suggestion of corruption on the part of the governing party must be prosecuted to the fullest extent of the law,” he said in a statement.

Siphithi Sibeko, Sars media manager, said they were prohibited by law to discuss or comment on the tax matters of their clients.

ANC spokesperson Pule Mabe ignored requests for comment.

siphom@citizen.co.za