As Finance Minister Enoch Godongwana prepares for his second attempt at presenting the 2025 Budget, much focus has been placed on expert recommendations for addressing the R60bn shortfall—an alarming gap that was initially proposed to be filled by a two-percentage-point VAT hike, which was rejected by members of the Executive.
Encouragingly, several parties, from Cosatu to the DA, have now joined ActionSA’s longstanding call to properly fund and capacitate SARS. This growing consensus highlights the urgency of the matter, but it’s worth noting that ActionSA has led the charge on this critical issue from Day 1.
The importance of properly funding SARS
SARS is South Africa’s tax administrator, tasked with a crucial mandate: to collect all taxes due, ensure compliance with tax, customs, and excise legislation, and facilitate legitimate trade that protects our economy. Without proper funding, SARS cannot fulfil this mandate effectively, leaving our nation vulnerable to economic decline.
SARS collects more than 90% of government revenue, yet it remains chronically underfunded. International benchmarks paint a stark picture of the extent of SARS’ underfunding. According to the widely accepted cost-to-collection ratio of 1:100 and the recommendation of 0.26% of GDP, SARS’ annual budget should be about R18bn. Yet, last year’s allocation was only R12.4bn, leaving the agency underfunded by R5.6bn, or over 30%.
This lack of resources undermines SARS’ ability to address South Africa’s growing tax gap—the difference between taxes owed and taxes collected—which currently stands at a staggering R800bn (32% under-recovery). With sluggish economic growth, one would expect the government to prioritize revenue collection, but this isn’t happening.
Moreover, underfunding SARS contributes significantly to the thriving illicit economy, which costs South Africa R100bn annually in lost tax revenue. The rise of illicit trade stifles economic growth, discourages foreign investment, and undermines business confidence. In turn, SARS’ ability to combat this issue is severely hampered, further widening the tax gap and eroding trust in the agency.
Fighting for SARS funding in Parliament
When the 7th Parliament began, ActionSA immediately rejected the proposed budget cuts to SARS. We argued that damaging SARS, the institution responsible for managing the nation’s tax and customs services, would only exacerbate the country’s financial problems. It was nonsensical that essential state functions like SARS and even the judiciary should suffer under austerity measures, while the billions spent on the bloated cabinet went untouched.
Ahead of the Mini Budget in October last year, I called on Finance Minister Godongwana to make reforming SARS’s funding his top priority. A mere R500m was allocated for this purpose, but it’s clear that this is far from sufficient. Such a shortfall severely limits SARS’ ability to fulfil its duties, particularly in combating the illicit economy and collecting the revenue essential for South Africa’s financial health.
Taking action on SARS funding
After the MTBPS was tabled, I wrote a letter to Minister Godongwana and the Director-General of Treasury, highlighting the dire underfunding of SARS. I recommended an immediate increase in the agency’s budget and proposed a detailed costing model to determine optimal funding levels. In response, the Minister acknowledged receipt of my concerns but cautioned against oversimplified funding models. He also stated that funding was considered as part of the annual budget process, where it must be balanced against other priorities.
While I understand the complexities of the budget process, I remain firm in my call for increased funding to capacitate SARS. However, it’s important to note that properly funding SARS alone will not resolve South Africa’s fiscal crisis.
No progress without bold action
The issue is not simply a lack of funding—it is also the rampant waste and theft of public funds. As Auditor-General Tsakani Maluleke aptly put it, the one action that would bring accountability to the state is “orange overalls for corrupt officials.” I couldn’t agree more.
If Finance Minister Godongwana does not ensure that those accused of corruption are prosecuted and jailed, then his efforts at reform will ring hollow. The National Prosecuting Authority (NPA), responsible for tackling state corruption, remains severely underfunded and understaffed. If the upcoming budget fails to include a dedicated allocation for prosecuting corrupt officials, South Africans should not be surprised when next year brings yet another round of headbutting over where to tax ordinary South Africans more.
A call for bold, immediate action
ActionSA remains unwavering in our commitment to securing the funding SARS needs to fulfil its mandate. However, this cannot be the end of the story. It is essential that public funds be protected from theft and mismanagement, and that corrupt officials face justice. Only through bold action on both fronts—properly funding SARS and addressing corruption—can we begin to address the fiscal crisis threatening our nation.
We have been calling for this since Day 1, and we will continue to fight for the resources SARS needs to secure a prosperous and accountable future for all South Africans.
Why ActionSA has been fighting for proper SARS funding since Day 1
As Finance Minister Enoch Godongwana prepares for his second attempt at presenting the 2025 Budget, much focus has been placed on expert recommendations for addressing the R60bn shortfall—an alarming gap that was initially proposed to be filled by a two-percentage-point VAT hike, which was rejected by members of the Executive.
Encouragingly, several parties, from Cosatu to the DA, have now joined ActionSA’s longstanding call to properly fund and capacitate SARS. This growing consensus highlights the urgency of the matter, but it’s worth noting that ActionSA has led the charge on this critical issue from Day 1.
The importance of properly funding SARS
SARS is South Africa’s tax administrator, tasked with a crucial mandate: to collect all taxes due, ensure compliance with tax, customs, and excise legislation, and facilitate legitimate trade that protects our economy. Without proper funding, SARS cannot fulfil this mandate effectively, leaving our nation vulnerable to economic decline.
SARS collects more than 90% of government revenue, yet it remains chronically underfunded. International benchmarks paint a stark picture of the extent of SARS’ underfunding. According to the widely accepted cost-to-collection ratio of 1:100 and the recommendation of 0.26% of GDP, SARS’ annual budget should be about R18bn. Yet, last year’s allocation was only R12.4bn, leaving the agency underfunded by R5.6bn, or over 30%.
This lack of resources undermines SARS’ ability to address South Africa’s growing tax gap—the difference between taxes owed and taxes collected—which currently stands at a staggering R800bn (32% under-recovery). With sluggish economic growth, one would expect the government to prioritize revenue collection, but this isn’t happening.
Moreover, underfunding SARS contributes significantly to the thriving illicit economy, which costs South Africa R100bn annually in lost tax revenue. The rise of illicit trade stifles economic growth, discourages foreign investment, and undermines business confidence. In turn, SARS’ ability to combat this issue is severely hampered, further widening the tax gap and eroding trust in the agency.
Fighting for SARS funding in Parliament
When the 7th Parliament began, ActionSA immediately rejected the proposed budget cuts to SARS. We argued that damaging SARS, the institution responsible for managing the nation’s tax and customs services, would only exacerbate the country’s financial problems. It was nonsensical that essential state functions like SARS and even the judiciary should suffer under austerity measures, while the billions spent on the bloated cabinet went untouched.
Ahead of the Mini Budget in October last year, I called on Finance Minister Godongwana to make reforming SARS’s funding his top priority. A mere R500m was allocated for this purpose, but it’s clear that this is far from sufficient. Such a shortfall severely limits SARS’ ability to fulfil its duties, particularly in combating the illicit economy and collecting the revenue essential for South Africa’s financial health.
Taking action on SARS funding
After the MTBPS was tabled, I wrote a letter to Minister Godongwana and the Director-General of Treasury, highlighting the dire underfunding of SARS. I recommended an immediate increase in the agency’s budget and proposed a detailed costing model to determine optimal funding levels. In response, the Minister acknowledged receipt of my concerns but cautioned against oversimplified funding models. He also stated that funding was considered as part of the annual budget process, where it must be balanced against other priorities.
While I understand the complexities of the budget process, I remain firm in my call for increased funding to capacitate SARS. However, it’s important to note that properly funding SARS alone will not resolve South Africa’s fiscal crisis.
No progress without bold action
The issue is not simply a lack of funding—it is also the rampant waste and theft of public funds. As Auditor-General Tsakani Maluleke aptly put it, the one action that would bring accountability to the state is “orange overalls for corrupt officials.” I couldn’t agree more.
If Finance Minister Godongwana does not ensure that those accused of corruption are prosecuted and jailed, then his efforts at reform will ring hollow. The National Prosecuting Authority (NPA), responsible for tackling state corruption, remains severely underfunded and understaffed. If the upcoming budget fails to include a dedicated allocation for prosecuting corrupt officials, South Africans should not be surprised when next year brings yet another round of headbutting over where to tax ordinary South Africans more.
A call for bold, immediate action
ActionSA remains unwavering in our commitment to securing the funding SARS needs to fulfil its mandate. However, this cannot be the end of the story. It is essential that public funds be protected from theft and mismanagement, and that corrupt officials face justice. Only through bold action on both fronts—properly funding SARS and addressing corruption—can we begin to address the fiscal crisis threatening our nation.
We have been calling for this since Day 1, and we will continue to fight for the resources SARS needs to secure a prosperous and accountable future for all South Africans.