Finance Minister Malusi Gigaba’s surprise announcement of an inquiry into South Africa’s tax administration has financial experts querying his motive.

In a statement‚ issued on behalf of Gigaba on Tuesday‚ National Treasury said the minister had approached President Jacob Zuma to urgently establish an inquiry into the tax administration and governance of SARS.

“The Minister has informed the SARS Commissioner of this proposed inquiry and the Commissioner has expressed his support for it and willingness to cooperate.

“We expect this inquiry to be constructive and to strengthen the institution. It is critical for government to determine the cause of the tax revenue under-collection to enable urgent remedial steps to be taken to ensure that SARS is able to meet its revenue targets set out in the Medium Term Budget Policy Statement and Budget.”

Treasury stated the inquiry would help assess what factors were responsible for the under-collection of revenue by SARS‚ and what needed to be done to improve revenue collection.

Treasury said while the economic cycle was the most likely and significant factor driving lower revenue collection‚ other factors could also be at play‚ like weakening tax morality and challenges facing tax administration.

“Whatever the reason‚ the risk of under-collection of revenue impacts directly on the size of the future budget deficits‚ and hence on the sustainability of the projected debt-to-GDP trend‚ and directly on our credit rating and growth prospects.”

Keith Engel‚ South African Institute of Tax Professionals CEO‚ said the announcement was bizarre.

“When Trevor Manuel was finance minister‚ it would have been Pravin Gordhan‚ as SARS head‚ who would have approached the minister and announced to him that there needs to be an inquiry and not the other way around as we are seeing now.”

He said there were several reasons for the sudden review.

“The main one is the grilling Yunnis Carrim‚ chairman of parliament’s standing committee on finance‚ gave on the general status of SARS.

“The grilling was around the return of Jonas Makwakwa to SARS.”

Makwakwa‚ who headed SARS’ business and individual tax section‚ was suspended and placed under investigation after the Financial Intelligence Centre raised concerns of unexplained payments into his personal bank accounts to the amount of R1.2-million from 2010 to 2016. Fellow SARS employee Kelly-Ann Elskie was also investigated after deposits of R450‚200 were made into her bank account.

Engel said Carrim also raised serious concerns over revenue collection shortfalls‚ which he and the committee felt were not just attributable to the economic downturn‚ but also growing weaknesses within SARS.

“Carrim was brutal in his criticism. Carrim’s concerns‚ especially around the growing lack of taxpayer morality‚ is echoed in Treasury’s statement.

“Its a hint of a tax revolt.”

He said another reason for the inquiry could be over the looming rating agency review.

“Government is clearly hoping that an inquiry into SARS would show the agencies that it is taking active steps to close the budget gaps.

“This would work in normal circumstances‚ but not when it comes to rating agencies. At this point rating agencies don’t want to see inquiries‚ they want to see action such as curbing expenditure.”

He said it was clear government was hoping for a magic trick‚ “but the only rabbit out of the hat that one can pull is around the raising of VAT to increase revenue.

“That unfortunately is a short term solution. The long term solution is going to have to be the cutting of expenditure.

“Unfortunately Zuma has made promises especially to his constituency around healthcare‚ possible free education and the nuclear build programme which requires increased expenditure and greater revenue collection.

“Zuma‚” said Engel‚ “was on an expenditure drive and has to keep going by not cutting back on expenditure and by increasing revenue.

“If he fails to increase revenue he is in trouble. The pressure has now come down to Gigaba. That pressure is going to be felt by the man in the street‚ especially the compliant taxpayers.”