But Franz Tomasek, head of legislative policy, tax, customs and excise at the South African Revenue Service also added that, despite the storm clouds, the agency has found that its efforts to restore public trust are having an impact.
"Some of these factors have played into pressure on revenue collection and on revenue buoyancy. And so, there has been an impact on tax morale there," Tomasek said while speaking at a panel discussion during the Organization for Economic Cooperation and Development's two-day meeting with the inclusive framework.
The framework is a 138-member coalition of both OECD and non-OECD nations, which was formed to carry out the organization's recommendations on how to combat tax avoidance and base erosion.
Tomasek spoke during a panel discussion of "tax morale," what the OECD has described as the "intrinsic willingness" of citizens to pay tax, beyond what is attributed to enforcement. In November 2019, the OECD issued a report on tax morale that found that trust in government and in how taxpayer dollars were spent was crucial for public willingness to pay taxes.
The South African Revenue Service was swept up in corruption scandals involving former South African President Jacob Zuma, as well as other public officials. In 2018, an independent commission called for widespread changes, which ultimately led to the hiring of a new commissioner.
More recently, the South African government created a "fusion center," including the revenue agency, to examine allegations of misuse of COVID-19 relief funds. In December 2020, the tax authority said it was committed to "restoring institutional integrity and rebuilding capability."
Tomasek said that the new commissioner, appointed in 2019, and a "new strategic direction" have helped the agency restore trust. He added that surveys conducted by the agency found that "perceptions of tax morale" improved between 2018 and 2020.
"So, with a little bit of luck, the work we are doing has been seen, it's being recognized, and we are hopefully seeing something of a turnaround that we hope we can build on," Tomasek said.
--Editing by Vincent Sherry.
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