Introduction
Representatives of the Office of the Mayor of Kimberley, Representatives of the business community and tax practitioner fraternity, members of the media South African Revenue Service (SARS) colleagues Ladies and gentlemen welcome to the new SARS branch in Kimberley. It is always a great pleasure for me to return here to my roots and to my family but today is particularly gratifying to be here to officially open this new office. When I last visited Kimberley in my official capacity in about the middle of last year to engage with our regional leadership, we could not meet at the local SARS office. We had to hire the historic city hall because our office was simply not suitable for any kind of meeting. In fact, it was not really suitable for any of the work we wanted to do there.
On that day I was last here, I took the time to visit the branch. It was during Tax Season and taxpayers were crammed up the staircase waiting – incredibly patiently given the circumstances – for their opportunity to be helped two at a time in the tiny reception area of the branch. Once inside, there were only a handful of desks where our staff could assist taxpayers and practitioners with submitting returns, questioning their assessments, handling account queries, applying for tax clearance certificates and a host of other important engagements they needed with SARS. Those SARS staff members and practitioners present here today need no reminding of the challenges that location presented to us in seeking to meet our very high service standards and commitments of efficiency, effectiveness and professionalism to the taxpayers of this country and our other key stakeholders.
The importance of service excellence for the compliance model
Colleagues, ladies and gentlemen, The despair and frustration that I felt that day – a despair and frustration I know that was shared for far longer by the staff and clients working for years in that environment – was not because I was from Kimberley (although being from here I do feel a special bond with the people of this historic city.
The despair and frustration we all felt was because the facility was simply not conducive to allowing us to give the kind of service that we must give to taxpayers if we are to meet our mandate of enhancing compliance. Because as you all should know by now, service is a cornerstone of our compliance model which holds that compliance will increase if and when we provide the majority of taxpayers who are willing to meet their obligations with firstly the information they need to comply and secondly by making it as easy, convenient and as painless as possible to meet their obligations. And there was nothing easy, convenient or painless about the previous branch!
It is a testimony to the resolve and dedication of our staff and the commitment to their civic duty of taxpayers and their representatives that people were still willing to queue in the cold of winter and the heat of summer in a stairwell to make their contribution to the growth and development of our country. This new branch – with its modern queue management system, state-of-the-art computer technology and face-to-face facilities – epitomises our commitment to taxpayers and their representatives that the words “At Your Service” which appear in the SARS logo mean something more to us that a slogan.
The old branch had just four service booths – while this new branch boast 20 counters and 6 consulting rooms. The old branch had no queue management system – the new branch has a modern, electronic queue management system which has significantly improved the flow of people through the branch. The net result has been that we were able to assist almost 40,000 clients in this branch during Tax Season with an average waiting time of just 24 minutes – and just 15 minutes average during the final month of November.
Tax Season 2010
Colleagues, ladies and gentlemen, at no time our commitment to service excellence put to the test as directly and sternly as during the annual Tax Season. Each year Tax Season sets a number of new records for service. This year was no different. Tax Season has now become the single biggest annual engagement between ordinary citizens and the state during which over four million citizens submit income tax returns. This year we have also set some new records for service including:
- A new record number of individual income tax returns received for a Tax Season
- A new record number of 3 million callers assisted by the SARS contact centre during Tax Season
- A new record number of 1.56 million taxpayers assisted at our branches and various outreach points to complete and submit returns
- Yet another record number of tax returns submitted via eFiling – which has proved itself to be the fastest growing internet based tax interface system in the world.
We are pleased to announce that this year’s Tax Season has once again reflected an increase in compliance among taxpayers albeit a modest one. By the close of the deadline for the submission of returns by non-provisional taxpayers on Friday, 26 November SARS had received 3,99 million individual income tax returns – a 1.85% increase in total submissions compared to 2009. More importantly, this reflected a 4.25% increase in taxpayers filing on time with approximately 3,3 million 2010 income tax returns filed this year compared to 3,1 million 2009 returns filed last year. The difference between the totals reflects the number of late or prior year returns filed – which in 2009 was about 760,000 and this year was under 700,000. This 10% reduction in outstanding returns is a direct consequence of the introduction last year of administrative penalties.
Once again we are pleased to announce that taxpayers continue to overwhelming adopt electronic filing as the preferred means of submission with almost over 95% of returns submitted via eFiling or electronically at a SARS branch. Fewer than 5% of returns – or just 171,000 returns were submitted manually which is a decline of almost 50% since 2009. eFiling once again led the way with 56.4% of returns – or 2,25 million returns submitted via the internet. This was followed by taxpayers using the electronic submission available when they visit a SARS branch. Over 1,56 million taxpayers were helped at SARS branches and outreach points in shopping malls, businesses and public areas to submit returns during the Tax Season.
This growth in electronic submission has helped SARS to continue to improve our service to taxpayers as reflected in the results of assessments issued within 24 hours of submission.
During Tax Season 2009, 2.3 million returns were assessed within 24 hours. This volume increased by 18% in Tax Season 2010 to 2.7 million returns. This rapid turnaround allowed SARS to refund eligible taxpayers in record time. During Tax Season this year, SARS paid R11.9 billion in refunds to individual taxpayers compared to R10.5 billion last year – a 13% increase. Of these refunds, 79% were paid within 48 hours of assessment. This means that the vast majority of taxpayers who were due a refund received it in their bank accounts less than three days after submitting their returns. Given the current economic circumstances, this injection of cash into the economy will have provided very welcome relief for both taxpayers and the broader economy. On the other side of the coin, the assessment process resulted in additional assessed tax liabilities totalling R9.1 billion – 14% up on 2009.
Call centre improvements
Ladies and gentlemen, two years ago taxpayers and practitioners calling the SARS call centre for support or advice experienced significant frustration in getting through – especially during peak periods such as the last week of Tax Season. I am pleased to report that we have worked tirelessly at improving our call centre performance over the past year and can be very proud of the progress we have made in this important channel of engagement with our clients. In the final week of Tax Season 2010, our contact centres answered 217,748 compared to the 117,546 calls answered last year; an improvement of almost 100%. Overall during Tax Season, the number of calls answered improved from 53% in 2009 to an impressive 90% in 2010. The final day of deadline also saw the Contact Centre set a new milestone of answering a record 49,795 calls. For the statistically minded, that works out to over 4000 calls per hour or a staggering one call every second for 12 hours!
Early filing improvements
Colleagues, ladies and gentlemen, the story of this Tax Season is one of normalising the submission of income tax returns as a regular, uneventful, unstressful and uncomplicated annual process for taxpayers, tax practitioners and SARS alike. The old adage that “no news is good news” proved true for Tax Season this year. There were no major queues, no significant delays, no major drama. The improvements we implemented for this year – including new state-of-the-art queue management systems in branches, new system capacity and faster technology for eFiling, additional capacity for our call centres – all contributed to one of the smoothest, most uneventful Tax Seasons to date.
Taxpayers themselves also contributed significantly towards this year’s smooth and efficient process. Taxpayers in greater numbers than ever before heeded our call to file early and avoid the last minute crush which has marked previous tax season deadlines. It took just seven weeks in Tax Season 2010 to reach 1 million submissions compared to 16 weeks in 2008. Another indicator of early filing is that we received approximately 750,000 returns within the first month of Tax Season this year compared to approximately 500,000 in 2009 and only 130,000 in 2008.
A continued growth in compliance
Colleagues, ladies and gentlemen, Tax Season is a crucial part of the tax compliance journey. It is the start of the assessment process where taxpayers declare their income and deductions along with tax paid to date so that an assessment can be made to calculate their overall liability.
We believe that years of laying a strong foundation for tax morality – coupled with the introduction of an effective new penalty regime and the significant improvements in risk detection provided by third party data and other sources as part of the modernisation programme - is bearing fruit at exactly the time it is most needed to drive compliance.
We must thank the 4 million taxpayers and the hundreds of thousands of employers who met their obligations during the Tax Season and contributed to their side of the social contract with government. The taxpayers armed with their IRP5s, medical aid certificates, ID books and banking details, who caught buses and trains to wait patiently at a SARS branch so that they could meet their obligations as citizens are the true heroes and success story of Tax Season. Fortunately these people are in the vast majority.
Our calculations show that almost 81% of taxpayers who were due to submit a return by last Friday’s deadline did so. This compares to 79% last year and 58% in 2008. Unfortunately, this still leaves some 780,000 taxpayers who have failed to comply and whose returns continue to trickle in late to SARS. In fairness to those who have heeded the call to comply, who each year join the ranks of the honest citizens of our country, we must act strongly against those who view the deadline as a guideline.
During 2009/10, SARS issued more than 255,000 penalty notices to taxpayers with multiple outstanding returns resulting in the submission of over 130,000 late returns. This has been followed up in the past few months with the issuing of approximately 60,000 IT88 agent appointment notices to recover outstanding penalties from defaulting taxpayers’ salaries. To date we have collected over R50 million in penalties for late submission of returns.
This administrative penalty system will be further enhanced and expanded in the coming months and years – not to punish defaulting taxpayers but to ensure fairness and equitable treatment for all.
Because, ladies and gentlemen, I think as taxpayers ourselves we can all agree that if we are making the effort to meet our obligations then it is only fair and reasonable that those who are not pay the price for their recalcitrance.
Conclusion
Ladies and gentlemen, you have heard from me about the improvements we have achieved this Tax Season. But the real measure of success is in the impact we have had on taxpayers. I am pleased to say that I have received a great number of letters and emails from taxpayers complimenting SARS on its eFiling system, branch service and overall speed and efficiency of this Tax Season. I would like to read one such letter which I received from a taxpayer which I think best sums up the kind of impact which we hope to have on taxpayers as part of our service commitment and compliance model.
It reads: Dear Mr Magashula I would probably consider myself as the previous spokesman for all the pessimistic South Africans who believed that once the World Cup had ended, our country would revert to being a lawless, crime ridden society in which parastatal organs were devoid of any sense of urgency or simple customer services. I wish to inform you that the South African Revenue Services has forced me to feast on humble pie through its efficiency and impeccable service. My wife and I both submitted our tax returns on Monday, 12 July 2010 at approximately 8pm via your online filing service. The site was user friendly and, having the source documents at hand, the process took no more than a few minutes.
By the morning of Tuesday, 13 July 2010, at approximately 8:50 am we already received notification that our assessments had been completed and had been posted on the eFiling system. That is less than 12 hours later!!! Fantastic!!! Take a bow, good sir and please pass my commendations on to your staff. Your department has exceeded every expectation. Your service is way above what is often described as world class. It is proudly South African evidencing the true sense, spirit and intent of Ubuntu.
Colleagues, This new branch in Kimberley gives us the foundation and facility to provide the kind of service which taxpayers, practitioners and other stakeholders deserve and expect and which we can rightly feel proud of. But it is only a building. And eFiling and BFE are only systems. Service is provided by people. It is provided by people who are passionate. By people who are dedicated. By people who believe in what we are doing and in the greater good and higher purpose of our calling. It is provided by people who act with unwavering integrity, professionalism and conviction. It is provided by the people in this room. Your challenge is to continue to live up to the reputation we have set as an organisation which is efficient, effective, corruption-free and above all which cares for the people of our country.
I thank you.
Source: South African Revenue Service
