Thank you would be nice, Edward Kieswetter

The South African Revenue Service (SARS) has come under fire for its aggressive, adversarial relationship with taxpayers.

This is in stark contrast to other countries, such as Switzerland, where the taxman thanks taxpayers for their contributions.

In 2018, South African billionaire Johann Rupert said SARS did not treat business leaders with the respect and appreciation they deserve.

He revealed that in Switzerland, where his luxury goods company, Richemont, is based, he has a good relationship with the tax authorities.

“In Switzerland, I got a letter of ‘Thank You’ from the taxman,” he said during Power FM’s Chairman’s interview in 2018.

This is in stark contrast to South Africa, where he is the subject of widespread harassment at the hands of the tax authority.

“SARS harassed me for eight years. So, unlike what your friend with the red beret said, I am ‘influential’ in SARS. No, it is the opposite,” Rupert said.

The businessman’s view about SARS is widely shared among many business leaders, albeit quietly, because of the fear of persecution.

There is a widely held belief that SARS is squeezing every last penny out of law-abiding citizens and businesses, while corrupt politicians get away with paying very little.

The late economist Mike Schüssler referred to the practice as “flogging fewer donkeys harder”, referring to South Africa’s narrow tax base being squeezed.

SARS’ overreach has resulted in a string of lost legal battles where the courts ruled that it had overstepped its legislative authority or failed to follow due process.

Legal experts have noted an unprecedented loss ratio, highlighting a trend where the judiciary is increasingly acting as a check on aggressive tax collection tactics.

Tax practitioners and professional bodies have also become increasingly vocal about what they describe as a culture of aggression within SARS.

Low tax morality in South Africa

SARS faces a challenging situation as a large portion of the money it collects is wasted by the government.

President Cyril Ramaphosa described the situation well in his first State of the Nation address in February 2018.

He said that tax morality is dependent on an implicit contract between taxpayers and the government.

In this contract, he said taxpayers can expect state spending to provide value for money and be free from corruption.

However, in South Africa, there is widespread corruption and looting, and taxpayers receive very little value for their money.

Simply put, the government has broken its implicit contract with taxpayers, which resulted in low tax morale.

This low tax morale means that South Africans hate paying taxes and avoid them in any way they can. In turn, SARS has become extremely aggressive.

Instead of addressing corruption and mismanagement, the state is giving more money to the tax police.

This has created an adversarial relationship between South African citizens and the state, especially the revenue service.

SARS Commissioner Edward Kieswetter has been vocal about the link between government waste and tax morality.

He admitted that taxpayers feel morally justified in not paying their taxes when they see inefficient spending, high levels of corruption, and self-enrichment by a few.

He added that compliance is shaped less by the fear of being caught and more by whether taxpayers feel their money is being used effectively.

However, Kieswetter has been very clear that while corruption and government waste are deep frustrations, they do not justify withholding taxes.

SARS is also making life difficult for law-abiding citizens and businesses through things like unnecessary and costly audits.

A ‘Thank You’ would be nice, Edward Kieswetter

Edward Kieswetter can take a leaf out of the Swiss taxman’s book and start to personally thank large taxpayers in South Africa.

It is true that the SARS Commissioner could not affect political change or ensure that tax money is not wasted.

He has previously told South Africans that if they don’t believe they are getting value for their money, they should use the democratic system to change the government.

“If this government does not deliver, it should not be the governing party,” he said during a PSG Konsult’s Think Big Series in 2023.

He argued that withholding taxes doesn’t hurt the corrupt political elite as much as it hurts the most vulnerable citizens.

He explained that tax revenue funds social grants, healthcare, and education. If the revenue dries up, these essential services are the first to collapse.

A cheap and easy way for Kieswetter to show his appreciation for taxpayers’ contributions is to send them “Thank You” letters.

South African taxpayers receive very little in return for their tax contributions, and SARS harassment does little to improve tax morale.

Instead of another notice of an unnecessary tax audit from a SARS tax official, a personalised letter from Kieswetter will make all the difference.

Such letters will start to mend the broken relationship between SARS and taxpayers and show that their money is appreciated.