Monday, October 18, 2010

Sars bleeding, yet govt continues to waste money

Kim Cloete*|15 October 2010 15:39 Sars bleeding, yet govt continues to waste money

It's clear when the going gets tough, the tough get dirty argues Kim Cloete.
CAPE TOWN - This past week has seen a whirl of activity in Parliament, with mounds of paperwork, hopeful plans, strategies and reports being presented to MPs. With this has come more revelations of wasteful spending and a warning that with reduced tax collections this year, we're in for a rocky ride, with far less money to go around.

Lest anyone forget the rough road the economy has travelled over the past year, the Sars Commissioner, Oupa Magashula, reminded MPs of the effect the downturn has had on its coffers.

2009/10 will go down as the year debt rose and collections crashed.

Sars' overall revenue declined by R26.4bn, with corporate income tax plummeting by 18% compared to the previous year, customs duties 14% down and VAT slipping by 4%. The credit crunch also took its toll. Companies and individuals alike found themselves sinking into debt, with Sars often the loser. "It significantly affected their ability to pay on time and in some cases at all," Magashula told Parliament's Finance Committee.

At least Sars is not alone in its predicament. The commissioner said similar trends had been reported by tax authorities the world over.

Many taxpayers were late at the gate. Sars issued more than 270 000 penalty notices to taxpayers with multiple outstanding returns. This pulled 80 000 late returns into the tax basket.

With the chips down, this past year has seen a full house of wheeling and dealing. The warehouses have been crammed with illicit and counterfeit goods - from two warehouses stacked with booze to others packed with 67m cigarettes, 340 000 DVDs, 35 tons of textiles and 400 seizures of drugs with a street value of R280m.

It's clear when the going gets tough, the tough get dirty.

And then there are the government officials who are partying merrily and living the good life as if the country is swimming in money.

This past year, has seen the police department get seriously flashy, with its Table Bay hotel bills for the minister and eight officials, sunroofs and ambient lighting in the ministerial BMW's and giant poster billboards of the minister of police, Nathi Mthethwa.

The department's finding it too hard to keep out of the news. Over the past few days, the minister has confirmed that a new "official" residence for the National Police Commissioner, Bheki Cele, cost taxpayers R3.7m.

Cele wasn't happy with the less luxurious houses he was offered in Pretoria's Silverton.

Mthethwa said he hadn't approved the purchase of the house, as this was the responsibility of the department's accounting officer. But surprise, surprise, the accounting officer for SAPS is Bheki Cele himself. We'll be watching to see if there's any response from the Public Service Commission as to whether he thinks it's a clear conflict of interest.

The latest spending revelation was the police department's glossy Rivoningo magazine, which cost nearly R15m to produce 50 000 copies a quarter over 21 months.

On a wider scale, there's now been a lot of talk about getting departments, provinces and municipalities to account for their spending and services.

The minister of public service and administration, Richard Baloyi, raised this in Parliament this week, following the signing of delivery agreements intended to get all spheres of government to streamline their priorities - and account for their work.

But before the news about the agreements was digested by journalists, he was asked to speak about the renewed public service wage negotiations - considered a more urgent and weighty issue, at least for now. A revised wage agreement would obviously suck more out of government's depleted barrel of money. A somewhat uneasy quiet over the past few weeks was broken by the SA Democratic Teachers' Union's decision to insist on a revised government offer, although it said it would not re-commence the strike.

Baloyi wouldn't reveal much, except to say government was close to finding a solution with labour. "We are hopeful that we will see ourselves on a forward-march to communicate to people ‘Yes' - We have come to the end of this."

Yes, but not without some caution from his cabinet colleague.

Finance Minister Pravin Gordhan warned in Parliament this week that more jobs could be squeezed if wages were hiked. "It's a simple equation if you like ...that if we continue to increase current benefits for current workers, we crowd out future employment."

A concern over generous wage deals and its impact on unemployment was also raised in the IMF's recent report on the state of the South African economy.

In the medium-term, it'll be interesting to see if the delivery agreements announced by Baloyi make a difference. They look at sharpening up service delivery, knocking corruption, improving business systems and restoring the faith that South Africans have in the country. The confidence part of the deal is the most nebulous, but possibly the hardest goal to achieve. Since the World Cup, our own confidence in the country and government has taken a dive - and we need some clear leadership to get into the optimistic groove again.

*Kim Cloete is an experienced journalist with a keen interest in the political economy. Before pursuing a career as an independent journalist, she spent time as a television journalist and later Parliamentary Editor for SABC Radio and TV News. Kim was awarded a Nieman Fellowship at Harvard University in 2005/06 and has received several national and international awards for her work.

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