Home Accounting and Auditing Time to separate the Tax Ombud from SARS to strengthen independence

Time to separate the Tax Ombud from SARS to strengthen independence

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It’s long been a bone of contention that the Tax Ombud is seen by some as an enforcement arm of SA Revenue Services. That’s not what the Tax Ombud was set up for – nor does it want to be perceived that way. The Office of the Tax Ombud (OTO) was set up as an independent complaints resolution body.

But the perception is understandable given that SARS controls OTO’s finances and pays its salaries. It also controls OTO’s staff, disciplines them and can fire them. They are also subject to SARS’ internal staff policies.

The offices leased by OTO is in SARS’ name. None of this gives the taxpayer any comfort that the Tax Ombud is acting independently of SARS, even though the Tax Administration Act requires the Tax Ombud to “act independently” of SARS.

At a recent Mail & Guardian-hosted event, the question before a pane, of speakers was whether it was time to separate OTO from SARS. More precisely, the question was whether the OTO should be given structural independence from SARS – with the panel in unanimous support of the recommendation.

Here’s what the Tax Ombud’s website promises: The office of the Tax Ombud provides you with a fair and simple way to seek a resolution for a service, procedure or administrative dispute you have already unsuccessfully tried to resolve through SARS. The Office of the Tax Ombud is independent of SARS.  

“The Ombud endeavours to resolve complaints within 15 business days. “We are neither for SARS nor for the taxpayer. We simply look at the facts of the complaints and, where possible, propose a solution,” says Judge Bernard Ngoepe, the Tax Ombud.

Judge Bernard Ngoepe, the Tax Ombud – wants more structural independence from SA Revenue Services

“We are an independent and impartial avenue for taxpayers who have been unable to resolve a service, procedural or administrative complaint through the normal complaints management channels.”

The office was opened in 2013 with a staff of three, which has now grown to more than 40, reflecting the number of complaints being fielded annually by the office.

Attending the panel discussion on behalf of SA Institute of Business Accountants was project director Tania Lee: “As Saiba, we support the separation of the OTO from SARS because of the potential to for conflicts of interest when they are seen by taxpayers as being too structurally intertwined. The OTO is doing good work in pursuit of its mandate, but what is needed is greater structural independence.”

“People must pay tax, but they must be treated fairly,” says Ngoepe. “But they musn’t pay one cent more than they should pay.”

Complaints to the OTO range from the length of time it takes to handle matters. “We’d like SARS to put in place measures to handle complaints. There shouldn’t be complaints. They (SARS) should treat people well, and fairly, so we don’t have complaints.”

That is how to build tax morality, added Ngoepe.

Speakers included Judge Bernard Ngoepe, the Tax Ombud, Adv Lucia Hlongwane, CEO of Walena Africa Capita; Wayne Duvenage, CEO of Organisation Undoing Tax Abuse (OUTA), Pieter Faber, executive of the tax department at SA Institute of Chartered Accountants (Saica); Professor Deborak Tickle, associate professor in tax at University of Cape Town; and Dr Sharon Smulder, project director for tax advocacy at Saica.

As the OTO’s 2018 annual report shows, the number of complaints against SARS keeps increasing each year.

At the Mail & Guardian event, Ngoepe’s supported the call for the structural independence of the OTO. The proposal was supported by taxpayers, tax practitioners, civil society, tax industry bodies, academia, as well as representatives of private and public sector entities.

Since being appointed as the first-ever Tax Ombud in October 2013, Judge Ngoepe has been a vocal advocate for the OTO to be independent of SARS.

Judge Ngoepe said: “The overwhelming support expressed by our stakeholders today for the structural independence of the office is a step in the right direction. Stakeholders expressed their belief that an independent OTO will be better positioned to make a positive contribution to the country’s tax administration system and to help promote a healthy balance between SARS’ powers and taxpayers’ rights. I am hoping that this engagement will strengthen and speed up the process of the OTO becoming independent from SARS. I have written to various Finance Ministers about this issue over the past few years, without response. The outcome of today’s discussion will be compiled into a report to be used in support of this request. I am not going to rest until this office has attained structural independence.”

Source: Tax Ombud 2018 annual report