Editorial | Crackdown on illegal trade welcome

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News that Sars is going into sleuth mode to uncover those involved in the growing shadow economy is another affirming sign that our tax collecting authority is making strides in getting back on track.
We reported on Tuesday that the research – aimed at understanding the country’s shadow market and its impact on the economy – will be conducted by units previously shut down by disgraced former Sars commissioner Tom Moyane.
The big business unit and the illicit economy unit – crucial and once highly efficient structures – were re-established in August 2018 in one of the first moves to attempt to undo some of the devastation caused by Moyane.
The Nugent judicial inquiry highlighted much of the Zuma crony’s disastrous and self-serving decision-making which ultimately resulted in huge tax shortfalls and the near transformation of a once internationally respected tax authority into a state capture machine.
Though Treasury announced in February that yet another revenue shortfall was expected for the 2018/19 financial year, it is comforting to know the key units are back in place and that the political will now also exists to stem the tide of future tax losses.
Focusing on the illegal economy is the sort of forward thinking approach that will help Sars and this country out of the mire, particularly when you consider that the shadow market amounts to roughly R1-trillion, or 20% of the gross domestic product (GDP).
Understanding the extent, reach and impact of this massive trade is critical, as a recent report by ACCA, the global body for professional accountants, estimates SA’s shadow economy will rise to 24% of GDP by 2020.
Illicit trade takes many forms. Some, like human trafficking, the illegal stripping of natural resources, tenderpreneurship, and the smuggling of taxable goods and contraband, have been seen first-hand in the Eastern Cape.
The only way Sars can restore some of the confidence of corporate and private taxpayers is by shifting its focus back to the real culprits.

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