Whatever one’s views, there is consensus that one of the best decisions he made was to appoint former Judge Robert Nugent to head up a commission of inquiry into tax administration and governance at the South African Revenue Service (SARS).

The Nugent Commission, as it is popularly referred to, was constituted on 24 May 2018 under Proclamation 17 of 2018 and is assisted by Prof Michael Katz, Mr Vuyo Kahla and Adv Mabongi Masilo. The Commission, despite tight deadlines, has already produced and presented its interim report to the President. Its recommendations are explicit and unequivocal; Tom Moyane must be removed with immediate effect to arrest the decline of revenue collection. A quote from the interim report is plain in its derision of Commissioner Tom Moyane, “The day Mr Moyane took office was a calamity for SARS. Almost immediately, and then continuously for the next eighteen months, SARS was thrown into turmoil… with tragic consequences for the reputation of SARS, and tragic consequences for the country at large”.

The consequences for the country, as Judge Robert Nugent refers to the damage wrought on the institution, have been massive. SARS is a vital component part of the architecture of the State. Its efficacy is key to the welfare of the State and its citizens, especially as almost R1 trillion passes through its hands annually. The Interim Report makes clear that revenue collection and the erosion of tax compliance have suffered badly on Tom Moyane’s watch. The task of rebuilding the institution, from its operating model to technological systems to people management, is enormous, but the biggest hurdle is one of trust, both inside and outside of the institution.

Trust is in short supply in South Africa. Trust between each other and, crucially, trust between State and citizen. In the case of SARS, mistrust and anger may cause citizens to withhold taxes with the result that there is less in the fiscus to upgrade infrastructure and provide services that may impact the poorest. The result is that service delivery protests have become the norm in far too many townships. According to Municipal IQ’s Hotspots Monitor, 2018 has the dubious distinction of being the year with the highest number of service delivery protests, many of which have turned violent. This organisation ought to know, as it gathers local government data and intelligence in a systematic way. The violence in many townships takes racial overtones, as was noted in a previous CUD article, Driving Difference, and is almost solely attributed to apartheid.

The case of SARS is the antithesis of the “blame-the-past” narrative. It was, until Tom Moyane’s tenure, on a “trajectory of modernisation”, as the Commission refers to it, and tax collection was on a constant upward path, with the concomitant benefits a surplus has for fulfilling government priorities and citizen needs. The destruction of the institution has had devastating effects that will portend an immediate future with very little change in the proverbial till.

The Nugent Report is profound in its elegance and simplicity as it highlights two “people issues” in particular. The first is reference to the morale of employees pre and post Moyane. The pre-Moyane references are worthy of a quote, “…in any organisation the morale of the workforce is key and in that respect SARS also excelled. Employees were inspired by a conviction, instilled in them by former Commissioners, they were working for the ‘higher purpose’ of creating a better South Africa.” The notion of higher purpose for a better, collective future certainly undergirds the values of the Constitution.

The second issue that provides succour to many who may be quietly panicking about the future of the country is that of Judge Nugent’s assessment of a changing attitude of people who came to give evidence before the Commission. While many were fearful and reluctant initially, this began to change as the Commission’s proceedings progressed.  The Report attributes this change of heart to the following, “Partly it is an increasing anger amongst employees at the damage they perceive to have been done to SARS and themselves. Partly it is an increasing appreciation that someone is listening to what they have to say. Partly it is an increasing awareness that if they want things to change they must take the risk of speaking out. And partly it is an increasing confidence that the work of the Commission might indeed bring about change”. It is clearly these people who provided information that aided the work of the Commission. Tom Moyane on the other hand, together with a cabal at senior management, obfuscated and attempted to discredit the work of the Commission, but to no avail.

The conclusions of the Nugent Report highlight the imperative for governance as core to the success of any institution, not least a country’s tax collection entity. The premium on governance has resonance across the spectrum of all citizens and provides a very timeous basis for this to become norm, and not the exception in South Africa.

Mr President, you have done well to appoint the Nugent Commission. Its pithy but profound recommendations in the Interim Report must be acted on urgently if we hope to salvage what remains of SARS and rebuild it into the world-class institution it once was.

By Ms Zohra Dawood, Director

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