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SARS Spends 1.1c to Collect R1
Source: Google Alert
Source Date: Friday, October 28, 2011
Focus: ICT for MDGs, Institution and HR Management
Country: South Africa
Created: Oct 28, 2011

But back to the 1.1c - a phenomenal amount. Compare this to Sanral’s proposed toll road system which is expected to collect tolls on Gauteng’s highways from next year. Depending on which amounts you use, Sanral aims to collect approximately R24bn over a period of eight years from Gauteng motorists. Sanral will spend approximately R6.2bn to collect this toll which means that for every R1 Sanral collects, the agency will spend 26c. This is a cost ratio of 26%.

We may not be comparing apples with apples, but it shows just how efficient Sars is.

But it is not only Sars’s cost efficiency that impresses.

The annual report is the best annual report to come out of a government agency this year. It was available on Sars’s website within minutes of Magashula’s speech in Parliament. Just for interest sake, the Department of Trade and Industry tabled its annual report the previous day, and on Friday it was still not yet on its website.

Sars’s annual report is extremely detailed with virtually all activities measured against targets and benchmarks. There are some areas where targets were not met, but this was justified with clear explanations.  In many ways it is reminiscent of an annual report of a private sector bank.

Even the value statement starts with the words: Sars has zero tolerance for corruption.

I know many people will loudly complain about this eulogy of Sars. The agency is not always the public’s friend and officials have been known for their aggressive approach to tax collection, especially for those who have been privileged enough to undergo an audit.

But the report shows that Sars has a firm grip on costs and efficiencies.

It is just so ironic that while there is this emphasis on costs and efficiency in the collection process, emphasis on this flies out of the window when government departments spend cash.

To quote another phenomenal number: R30bn of taxpayers’ money was misappropriated last year through corruption, incompetence and negligence.  This represents approximately 4.5% of the R674bn collected, or in Sars’s metrics, 4.5c of every R1 Sars collected.

In essence, it means that government spends 5.6c to collect R1 of tax – a number that would count among the worst in the world.

This scenario is very interesting. On the one hand South Africa boasts a very efficient revenue collection system comparable to international best practices, but on the other we have a public service that with regards to efficiency and ethical performance ranks among the worst in the world.

(In sitcom terms, this is a classic case of the moral differences between promiscuous Charlie Harper and his over ethical brother Alan in Two and a Half Men.)

The reality is that it is not too difficult to run an efficient business, whether it is in the private or public sector. Three critical elements need to be present: Good leadership, exceptional talent and a sound business model.

If one element is missing, the business will struggle. But it all starts at the top: you need good leadership. Sars’s current status can be directly attributed to its former head Pravin Gordhan and the continuation thereof through Magashula.

Good leadership leads to the hiring of the best available talent and this in due course, leads to prosperous institutions.

The key question is therefore: Why does Treasury and Sars have good leadership and other departments do not?

Perhaps the answer lies is in the photos you see when you Google “South Africa” and “corruption” and hit the images link. But that is a topic for another day.

Maybe a better question is whether we are just lucky that Magashula followed in Gordhan’s footsteps.  Just imagine Sicelo Shiceka got the nod from President Jacob Zuma.

The reality is that the Sars’s annual report proves that a critical government agency is performing to international standards, both in terms of efficiency and ethics. Hopefully other government departments will be inspired to do the same.

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