SARS boss bemoans state capture, urges single digital ID

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 06 Sept 2023
SARS commissioner Edward Kieswetter. (Image source: GCIS)
SARS commissioner Edward Kieswetter. (Image source: GCIS)

South African Revenue Service (SARS) commissioner Edward Kieswetter has urged the adoption of a single digital identity by tax authorities.

Kieswetter made the remarks while addressing the Network of Tax Organisations (NTO) Conference in Cape Town yesterday.

The event was held under the theme: “Digitalisation of tax administrations and contemporary issues”.

The NTO is a global network of regional and international organisations of revenue administrations. Events held by the NTO and its members promote the exchange of experiences and peer learning across the world.

Said Kieswetter: “Heads of tax and revenue authorities, like myself, have to challenge their leadership teams to think differently and to challenge conventional thinking. So, in this vein, I want to challenge all the members of the NTO to become vocal advocates and promoters of a single digital identity.”

A single digital identity, also known as a digital identity or online identity, refers to a unique digital representation of an individual or entity in the digital realm.

It consists of a set of information and credentials that can be used to authenticate and verify the identity of a person or organisation online.

This digital identity allows individuals and entities to access various online services and interact with digital systems securely and efficiently.

“In the context of digital transformation and modernisation journeys, a really transformative common purpose objective would be to leverage efforts towards a single digital identity,” the commissioner added.

Beyond tax admin

According to Kieswetter, countries like Chile, Sweden and Norway have used a single unique digital identity for the whole of government, as well as subscription to financial services.

“This has enabled them not only to serve citizens better, but also for more effective detection of tax and economic crime, and law enforcement,” he noted.

“Generally, it’s proving to be a defining enabler towards improved delivery of social services and greater social cohesion.

“The achievement of a single digital identity is well beyond the scope of tax administration, but I believe we can lead the way given our dependence on it for more effective administration, though it will require strong political will and competent institutional leadership. The advocacy role, convincing, influencing and global networking of the NTO, positions it well to set a single digital identity as a global and clear common objective for its members.”

The call comes as it is estimated that 137 million people in Southern Africa do not possess identity documentation and 15 million of them live in SA, according to research undertaken by The Economist in its Digital Identity Report South Africa published in 2021.

This research reflects the growing digital divide between the developed and developing world, and the need for a digital identity programme in SA for inclusive citizenship and the elimination of identity fraud.

Digital IDs have been on the agendas of many emerging economies for quite some time, with an estimated one billion people in developing countries globally still lacking proof of any legal identity, according to the United Nations.

Serving corrupt intentions

Kieswetter also reflected on how the tax authority emerged from the jaws of state capture that affected many South African government institutions.

“When I joined SARS – for the second time – in 2019, it was at a challenging time. The organisation had become a victim of state capture,” he said.

“It had been repurposed to serve the corrupt intention of a self-serving leadership and their narrow interests.”

He pointed out that governance and integrity had deliberately been destroyed and well-established institutional arrangements were dismantled.

“Mission-critical technology modernisation was disrupted. As a result, internal trust and morale between employees and leadership had eroded. Competent professionals left many organisations. Public trust dropped to well below 50%. Revenue performance and tax compliance declined significantly.

“We were confronted with a clear mandate: to turn around SARS and this time rebuild it into a smart modern tax administration that could be trusted and admired. We had to restore institutional capability and integrity to deliver on its mandate, and improve overall performance.

“No sooner had we started, when we were confronted with the COVID-19 pandemic that brought its own set of devastating challenges. However, COVID-19 inadvertently took us to the drawing board to think from first principles, and very quickly accelerated our response towards reprioritising our technology investment to enable our employees to work during the hard lockdown and to allow taxpayers to continue to fulfil their tax obligations.

“We used the pandemic to our advantage and have enjoyed remarkable progress on our modernisation journey, but we still have much to do.”

Playing catch-up

He pointed out that before state capture, SARS was a leader in digital modernisation for many years. However, partly due to financial constraints, but also a short-term approach, budgets were then frozen for a number of years and SARS fell behind in driving technological innovation.

“We have now managed to restore some additional funds to continue our modernisation, but we are still substantially underfunded to move at the necessary speed in an environment that is changing exponentially, business models are being disrupted, and tax crime proliferating at an alarming rate.

“The challenge now is that we not only have to play catch-up after many years of under-investment, but we have to accelerate modernisation simply to remain relevant. We are at a point where we can again focus on innovation.

“The important lesson here is that the digitalisation journey is not a finite project, but a new way of being. Itis an ongoing journey. Once you suspend funding, the end result will always be the suspension of innovation and regression against the progress of other administrations.”