Ismail Momoniat: SARS revenue shortfall to blame for the VAT increase

The deputy director general at National Treasury was talking to the Nugent Commission of Inquiry.

Ismail Momoniat, head of tax and financial sector policy and deputy director general at National Treasury,  has told the Nugent Commission of Inquiry that had it not been for the revenue shortfall at the South African Revenue Services (SARS), Treasury would not have had to increase VAT by one percentage point in April this year. Momoniat was testifying alongside other Treasury officials at the commission, which is probing administration and governance at the tax agency.

Momoniat spoke openly and honestly about his frustration with leadership at SARS, and said that there didn’t seem to be political will within the revenue agency to prevent illicit financial flows. He also questioned why external legal teams were brought in to undertake investigations at SARS, how procurement processes were followed, and why the tax agency's internal legal unit wasn’t used.

Momoniat further noted that Treasury hopes to raise R25 billion from the VAT rate hike in the 2018/2019 financial year, provided no additional zero-rated items are added to the basket of goods which are VAT exempt.