10/03/2017 10:08 GMT | Updated 10/03/2017 10:30 GMT

Sars Accuses Veteran Judge Appointed To Look Into Its Affairs Of Organising A Tax Revolt

Sars: Judge Davis is undermining Sars leadership. Davis: Sars allows the wealthy to evade tax.

Sharief Jaffer
Judge Dennis Davis

The South African Revenue Service (Sars) has launched an unprecedented attack on Judge Dennis Davis, accusing him of "advocating a veiled strategy to mobilise a possibility of a tax revolt by taxpayers against the state".

In an angrily-worded 1,900-word statement reacting to statements made by Judge Davis last weekend, Sars spokesperson Sandile Memela said Davis "is part of a systematically orchestrated narrative that primarily seeks to decimate and undermine the leadership of Sars in order to engulf Sars into a crisis of lack of public confidence and illegitimacy".

Judge Dennis should recuse itself from the specialist tax committee which was set up in December by Finance Minister Pravin Gordhan to look at the closure of a number of enforcement units within Sars, governance and accountability within the organisation and the implementation of previous recommendations by the Davis Tax Committee.

This comes against the backdrop of an apparent breakdown in relations between Gordhan and Tom Moyane, the Sars commissioner.

Memela said Sars would look to engage Gordhan "urgently" on the matter, and it was also in the process of seeking a legal opinion with a view to lodging a complaint with the Judicial Service Commission as "it is treacherous and unprecedented for a judge to mislead the public".

So what did Davis say?

City Press and Fin24 reported Davis's comments at the Alternative Information Development Centre in Cape Town on Sunday, and Sars quoted the following as being "a patently false narrative":

  • "The biggest problem we face in South Africa today is an erosion of the integrity of Sars."
  • "We can have as much debate as we like about this (illicit flows), but if you do not have a Sars capable of actually dealing with multinational corporations and capital that seeks to evade tax, then frankly, you are going nowhere."
  • That the latest tax tables, published in the Budget Review, "make no sense". Treasury announced that only 103,000 people would fall into the new top marginal-income tax category. These are people who earn more than R1.5 million a year in taxable income and will be taxed 45 percent. "That makes no sense to me. There have to be more ... I know more people on the Johannesburg Bar earning R5 million a year than the tax tables show. Wealthy individuals are managing to escape the tax net and Sars is disingenuous to blame it on the economy, he said.
  • "We know the revenue is down by R14 billion on personal income tax. The commissioner (Tom Moyane) suggests that that is because of a downturn in the economy. Unfortunately for the commissioner, corporate tax went up by R6.5 billion. Tell me how that happens."
  • That the recent tax amnesty, called the Voluntary Disclosure Programme, would flop if tax dodgers were no longer scared of Sars.
  • "Some years ago, when Sars actually had a reasonably good transfer pricing unit, it audited 40 companies to see what the effect of a seriously rigorous audit would be. It collected R1.1 billion on one audit in one year. We are talking about a lot of money."