SARS Budget Vote Presentation to the Ad-hoc Committee on Finance

2 June, 2004

Contents 10 Years of delivery Key Government

Challenges Revenue Overview Service Assessment Enforcement Customs Law Administration Siyakha

Risk Management People Technology Finance Corporate Relations Internal Audit Communications Road Ahead

CONGRATULATIONS ON YOUR ELECTION!

Welcome to new members Thank you for your support…

10 years of delivery..BEFORE Low Revenue Weak customs Inefficient processes Ineffective enforcement Poor compliance Poor technology Low skills

AFTER Significantly increased revenue

collections Visible and more efficient customs More efficient, streamlined and

integrated processes Visible and more efficient enforcement Increased compliance culture Enhanced and stable technology

platform Enhanced focus on development of

technical and management skills

But, much still needs to be done! Tax gap – more revenue Trade control vs facilitation balance Compliance culture Process innovation Product redesign Focused enforcement Industry analyses Better skills Integrated systems Document management

Key Government Challenges Efficient delivery of social

grants to rural beneficiaries Expanding the Public Works

programme Addressing HIV and AIDS and

other emerging diseases Matching the skills to the

requirements of the economy Meeting increasing demand

for housing and services Promote National identity and

pride Border security

Reducing the levels of crime Provide the necessary skills

the economy needs Extend and protect the fruits

of democracy to most vulnerable groups

Position SA strategically in the global environment

Enhance service delivery and capacity

Improve intergovernmental relations and integration in implementation

Achievements For The Past Six Years

R 'billion 1998/9 1999/0 2000/1 2001/2 2002/3 2003/4

Target 179.2 193.9 213.6 236.8 268.5 310.0

Collections 184.8 201.4 220.3 252.3 282.2 302.4

Above/under target 5.6 7.5 6.7 15.5 13.7 (7.6) Total additional collections (10 year period)           50.4

Sources of Revenue 2004/05

Most significant change in the contribution from taxes this year is a higher contribution from Excise & VAT and a corresponding lower contribution from STC (approximately 2%).

VAT , 89,500,000

CUST OMS, 9,500,000P E RSONS, 105,938,000

COMP ANIE S,68,800,000

FUE L LE VY ,17,409,000

OT HE R, 11,464,700ST C, 6,760,000E XCISE , 14,021,911

RFT , 6,000,000 SKILLS, 4,300,000

Gross Tax Revenue 2001/02, 2002/03 and 2003/04

Revenue Source (Rbn ) 2001/02 2002/03 Y/Y

Growth 2003/04 Y/Y Growth

PIT 90.4 94.3 4% 98.3 4%

CIT 42.4 55.7 31% 59.7 7%

VAT 61.1 70.1 15% 80.6 15%

Other 58.5 61.9 6% 63.9 3%

TOTAL 252.4 282.0 12% 302.5 7%

Fiscal overviewR million 1999/00 2000/01 2001/02 2002/03 2003/04

Total Revenue

198,162.4

215,591.9

248,262.5

278,507.8

299,390.2 Total Revenue as % of GDP 24.2% 23.6% 24.6% 24.2% 24.5%

Total Expenditure

214,749.9

233,934.0

262,904.5

291,529.1

329,013.8 Total Expenditure as % of GDP 26.2% 25.6% 26.0% 25.4% 26.9%

Main Budget Deficit

(16,587.5)

(18,342.1)

(14,642.0)

(13,021.4

)

(31,385.2

)Deficit as % of GDP -2.0% -2.0% -1.4% -1.1% -2.6%

State Debt Cost

44,289.7

46,320.9

47,580.7

46,807.7

46,312.0 Debt Service Cost as a % of GDP 5.4% 5.1% 4.7% 4.1% 3.8%

GDP

819,420

914,634 1,010,91

9 1,149,89

1 1,223,80

5

For most developing countries prioritising human development needs is overshadowed by the funding thereof. A recent UNDP report used South Africa as an example to developing countries of how to fund development by broadening the tax base.

1,7 MillionImport

transactions

1,4 MillionExport

transactions

3 000Bonded

Warehouses

3 000Rebate

Manufacturers

14 000 SARS Employees

136 000Registered

Traders/Operators

1 451Manufacturers of

excisable products & 4 licensed distributors

1,4 MillionSACU Movements

SARS Volumetrics

4 MillionIndividual taxpayers

1,3millionCorporate Taxpayers

536 281Vat vendors

274 764PAYE Employers

SERVICE

Service Created dedicated service capacity at all SARS offices Established a free e-filing service for frequent filed taxes Consultation on draft taxpayer service charter Established two major inbound call centre in KZN(110 seats

growing to 220) and WC (120 seats growing to 280) Outbound call centre in Gauteng for debt collection /

outstanding returns: (60 growing to 140 seats in mid-July 2004) Simplified tax returns for easier completion and compliance Extended taxpayer education to increase awareness of tax

obligations Created the independent Service Monitoring Office to monitor

service Introduction Dispute Resolution Process for tax disputes

(2003) and Customs (2004)

Service: New Branch OfficesKZN Durban Branch Office in Durban Durban Customs Branch Office in

Durban Pietermaritzburg Branch Office Pietermaritzburg satellite compliance

office Pinetown Branch Office Mount Edgecombe Branch Office

Western Cape Western Cape Call Centre Taxpayer Service Branch Offices were

also opened in the following locations: Bellville Revenue Branch Office Interim Cape Town Revenue Branch

Office Cape Town Customs Branch Office

Cape Town International Airport New Cape Town Revenue Branch

Office Beaufort West Revenue Branch Office George Revenue Branch Office Parliamentary Service Unit – Cape

Town Paarl Revenue and Excise Branch

Office Worcester Revenue and Excise Branch

Office

Service : Next Phase Western Cape (2004) Stellenbosch Revenue and

Excise Branch Office Cape Flats Revenue Branch

Office Cape Town International

Airport Customs Branch Office Upington Revenue and

Customs Branch Office Vredendal Revenue and

Excise Branch Office Saldanha Customs Branch

Office

Gauteng (2004) Pretoria East : revenue office

(March, 2004) Johannesburg, in Carlton

Centre. Revenue and Customs Branch Office (April 2004 June 2004)

Enforcement Centre in Megawatt Park (August 2004 onwards)

Randburg : Revenue branch office (August 2004)

Soweto : expanded Revenue office . (August 2004)

Service: KPA’s1. To create and maintain a clear SARS CRM strategy

2. To implement SARS CRM strategy

3. To ensure effective Taxpayer education

4. To create and maintain a Taxpayer charter to meet citizen's needs to ensure effective service complaints and queries process

5. To ensure effective compliance with the Dispute Resolution process

6. To simplify administrative requirements for small business

The SARS Corporates Office Located at Megawatt Park, Johannesburg single office for large SA corporates Will cater for all taxes (currently only income tax) Start with 3 industry segments; 8 segments by

end of financial year Each segment will have account / relationship

managers Dedicated service for assistance to foreign

investors A new advance rulings facility will be introduced

early 2005 (legislation

Corporates Office: KPA’s1. To finalise a compliance and service strategy for large

business organisations

2. Implement industry segments

3. Develop and implement audit strategy for corporates

4. Improvement in service to corporates

5. Revenue collection

6. Manage payment process efficiently