SOUTH AFRICAN REVENUE SERVICE AMENDMENT BILL, 2002

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• SOUTH AFRICAN REVENUE SERVICE AMENDMENT BILL, 2002

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Purpose

• To brief the SCOF on the SARS Amendment Bill, 2002

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Background - 1

• SARS established as an organ of State on
• 1 October 1997
• Juristic person - own separate legal identity
• Within public administration but outside public
  service
• Reasons therefor
• Greater administrative autonomy
• Better control over its resources

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Background - 2

• SARS now in existence for 5 years
• 5 years to experiment with the model
• By and large the concept has proven itself
• As with any law the need for change arises
• Different reasons therefor
• Deal with them under the proposed amendments

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Consultation

• Bill was published in the Government Gazette on
  31 July 2002
• Invited comment
• SARS Bargaining Chamber
• SARS Board members

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Proposed amendments

• Summary of issues
• Objectives of SARS
• Functions of SARS
• Alignment with PFMA
• Appointment of the Commissioner
• Disestablishment of SARS Board and establishment
  of Specialist Committees
• Method of funding SARS
• Membership of the Government Employees Pension
  Fund
• Deletion of obsolete provisions and other textual
  matters

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Objectives of SARS

• Current wording concentrates on collection of
  revenue
• Following amalgamation of Customs and Revenue,
  SARS also has the important objective of control
• Therefore incorporate objective of control over
  import, export, movement, manufacture, storage or
  use of certain goods
• Clauses 2, 3 and 17

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Functions of SARS

• Similarly current wording concentrates on
  enforcement and advice on Revenue matters
• Enforcement references to legislation extended
  to include customs matters
• Advice
• Minister of Trade and Industry responsible for
  trade policy
• Linkage between customs matters and trade policy

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Alignment with the PFM Act

• When SARS Act came into operation - PFMA not yet
  introduced
• Exchequer Act, 1975 still applied
• SARS performed its functions and exercised its
  powers under the policy control of the Minister
  of Finance
• Consequential amendments required as a result of
  the introduction of the PFMA
• SARS is a National Public Entity listed in Part A
  of Schedule 3 of the PFMA
• Financial management and controls envisaged in
  Chapter 6 of the PFMA apply to SARS
• Section 3 of the PFMA provides that the PFMA
  prevails in the case of inconsistency with other
  legislation
• As the PFMA already ensures effective financial
  accountability, many provisions in the SARS Act
  have become obsolete
• Clauses 1(b), 1(c), 3(b), 4, 7, 11, 12, 14, 15
  and 16

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Appointment of the Commissioner

• SARS Act at present provides that the Minister of
  Finance must appoint the Commissioner for SARS
• President appoints the heads of national
  departments, as well as the Auditor-general, the
  Public Protector and also the Governor of the
  Reserve Bank
• Purpose of this amendment is to bring the
  authority to appoint the Commissioner in line
  with the abovementioned

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Disestablish Board / Establish Specialist
Committees-1

• Part 3 of the SARS Act provides for the
  establishment of a SARS Advisory Board
• Board is only an advisory and consultative body
• It advises the Minister and the Commissioner on
  the administration of the revenue collection
  system
• Role of the SARS Board in comparison to
  controlling boards
• Considered more appropriate to appoint specialist
  committees to advise on technical matters

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Disestablish Board / Establish Specialist
Committees-2

• Proposed to disestablish the Board clause 18
• Proposed that the Minister can establish one or
  more specialist committees clause 8
• Purpose of committees is to advise the
  Commissioner and the Minister on the management
  of SARSs resources including
• Asset management
• Human resources
• Information technology
• Human resources committees must advise-
• Minister on terms and conditions of employment of
  management
• Commissioner on terms and conditions of
  employment of other employees

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Disestablish Board / Establish Specialist
Committees-3

• Constitution, powers, procedures, disclosure of
  interest and remuneration of members
• Audit Committee
• No need to establish it i.t.o. SARS Act
• Sections 51(1)(a), 76(4)(d) and 77 of the PFMA
• Treasury Regulation 27.1 dated April 2001

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Method of funding

• Method of funding
• Section 25 of the SARS Act provides that its main
  source of income is money appropriated by
  Parliament
• Determined in accordance with estimates of income
  and expenditure
• International precedent for different mechanisms
  of determining income
• Propose a further option in terms of which the
  money appropriated by Parliament could be
  determined in a manner agreed between the
  Minister and the Commissioner
• Method must be approved by Cabinet

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Membership of the Government Employees Pension
Fund

• At present SARS Act requires all employees
  become members
• GEPF excludes certain persons, e.g. certain
  contract workers
• Proposal to align SARS Act with GEPF rules

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Deletion of obsolete provisions and other textual
amendments

• Most amendments arose as a result of the
  introduction of PFMA

Conclusion

• The proposed amendments will contribute to the
  efficient and effective functioning of SARS