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The launch of the new South African Revenue Services provides a unique opportunity for revenue collection in South Africa to shake off its past and move towards a new ere of efficient and effective tax collection. Revenue collection is central to the life of a government, and even to an economy. And now for the first time we have the political backing to go into revenue collection using business principles. It's critical that we make the most of this opportunity - we cannot afford to fail.

The third interim report of the Katz Commission called for a statement of Taxpayers Rights, and I indicated in my Budget Speech last month that I agreed with that proposal. However, improved revenue collection cannot be tackled from one side only - the commitment of both tax-payers and tax-collector is vital to the success of the exercise. That's why we see the need for a COMPACT between SARS and its stakeholders. We need to realise that there are rights and responsibilities on both sides of this compact. The right to collect tax must be balanced with the right to fair and efficient tax collection; taking responsibility to be fair and efficient from SARS and its staff must be matched with a commitment to compliance from the public. What SARS brings to the table is a commitment to reduce taxes through efficient, effective and fair tax collection. It also brings the commitment to invest in its people, and through doing that, a commitment to the vision of the new SARS by the staff.

What SARS is looking for from its stakeholders is the freedom and flexibility to run the service efficiently, a commitment by spending agencies to effective expenditure of the money that it collects, and the beginning of a culture of compliance on the understanding that it's in our own best interests to have a revenue collection service that works.

SARS LAUNCH PRESS PACK - ADDITIONAL INFORMATION CONCERNING THE SOUTH AFRICAN REVENUE SERVICE

For a number of years, awareness has been growing of the need for a major transformation of Customs and Excise and Inland Revenue. This has developed as a result of, amongst others, the inability to attract and retain suitably qualified and experienced staff; inadequate control over key resources and the absence of a sufficiently business-like and client-orientated managerial and operational mode;

Following recommendations from the Katz Commission, Cabinet approved:

the initiation of the reform of the Inland Revenue and Customs and Excise branches of the Department of Finance and the establishment of a Revenue Service entity viz. the South African Revenue Services (SARS) with a Board of Directors;
the principle of funding the SARS on the basis of a percentage of revenue collections, to be negotiated by the Board of Directors with the Minister of Finance and subject to the approval of the Treasury Committee and the Cabinet

SARS was then established as a department in terms of the Public Service Act, under the leadership of the Ministry of Finance. A Management Committee has been driving the reform process, and a Reform Project Team was also established to plan, initiate and manage specific projects which include:

human resource development, including an organisational structure
assessing possible legislative amendments, contracts and other legal aspects
developing a technology modernisation plan
providing internal and external communications programmes
establishing a corporate image for SARS
preparing budgets, financial controls and cash flow
interfacing between SARS and other public authorities; and
drawing up a business plan to integrate the above.

SARS SHORT-TERM PLAN OF ACTION:

1. HUMAN RESOURCES

Appointment of suitably qualified staff

SARS recently advertised for Chartered Accountants and whilst the selection process has not been finalised, an additional 34 successful applicants have received offers of employment. Thirteen of these accountants have been identified for employment in the Sandton Office, which is being built up as a specialised office dealing with large companies and sophisticated financial institutions.

In order to address the staff crisis in Johannesburg and Sandton, staff will be drawn from other offices that are reasonably up to date and assigned to Johannesburg and Sandton. The teams will concentrate on areas which are critical to collections.

25 000 applications were received for vacant posts advertised last year. Four hundred posts are expected to be filled by the end of the month.

Staffing of SARS

In an effort to establish stability, assurances have been given to the staff that all staff in Inland Revenue and Customs and Excise, as well as the Administration of the Department of Finance, would be transferred to SARS on 1 April 1996.

In determining the appropriate staffing structure for SARS's future requirements, sufficient opportunity will be created for the recruitment of outside skills.

Negotiations are currently taking place to solicit the assistance of personnel in the areas of security, inspection and storage of imported goods.

2. COMPUTER SERVICES

computer response times are still unacceptable, but specialist resources have been contracted to investigate mainframe and network constraints. This, coupled with recent upgrading of main frame hard- and software, is expected to result in the restoration of normal operating parameters.
The first phase of a new paperless computer system for PAYE was brought into operation during the weekend of 2 - 3 March 1996 after a development period of approximately one year. This new system provides for the computerisation of administrative routines that have, until now, relied on manual and paper-based processes. It also provides an accounting system with improved financial control over receivable and collections from employers.
A study will shortly be undertaken into the efficiency and effectiveness of SARS's entire computer services.

3. BORDER POSTS

SARS staff will be placed at two border posts between South Africa and Namibia.

The Department of Public Works has undertaken to provide necessary accommodation at a further 6 border posts between South Africa and Botswana and Swaziland by 30 June 1996. It has also been requested to arrange accommodation at smaller airports to house SARS staff to effect customs control. The Department has also been requested to upgrade the facilities at the Komatipoort border post. An amount of R13 million has been transferred from the Department of Finance for this purpose. The work is scheduled to be completed within 18 months.

X-Ray scanners

Negotiations have been completed for the provision of mobile scanners for Airports Company Ltd to be used at international airports. These will be used by SARS and the Narcotics Bureau to curb the smuggling of narcotics and illicit cargo. The first scanner will arrive shortly. Further negotiations are underway for the implementation of container X-Ray scanning technology.

4. INTERNATIONAL INVOLVEMENT

A British Overseas Development Agency team and a similar team from Sweden visited South Africa in December 1995 and January 1996, and have submitted its proposals for technical assistance to support both the Customs and Taxation functions. These proposals are currently being studied to determine how best to use the resources offered to maximise impact.
Plans are being developed to secure expertise from other governments that have recently under gone, and are still undergoing, transformation of their revenue-collection functions (e.g. New Zealand, Britain, Singapore)

5. BUSINESS PLAN

This plan co-ordinates the above activities within a strategic framework and will be used to access, where appropriate, additional funds which have been set aside in 1996/97 for the SARS transformation process (R150 million). In the Budget, the Minister of Finance announced that SARS would be expected to collect an additional R1,5 billion during the 1996/97 financial year.

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