When the going gets tough, the tough get going,” as Billy Ocean reminds us in his 1986 hit. But, as we listen to those words, one can’t help but wonder: Tough for whom? Is it for you, for me, for all of us – or perhaps for the South African Revenue Service (Sars)?

In Sars’ media release of October 30, titled ‘In tough economic conditions, Sars increases its compliance focus’, the central message is that Finance Minister Enoch Godongwana has revised the February 2024 Budget net tax revenue estimate down from R1 863-billion to R1 840.8-billion, a reduction of R22.2-billion. This raises the question: How will this shortfall be made up? Will it be through increased compliance, as the title of the media release suggests?

The media release opens with: “The South African Revenue Service (Sars) welcomes the Medium-Term Budget Policy Statement (MTBPS) tabled in Parliament today by the Minister of Finance.”

So, how is the R1 840.8-billion made up? “As of September 30, Sars collected gross revenue of R1 070.4-billion, yielding a net revenue of R846.2-billion and R224.3-billion in refund payments. “The revenue performance was bolstered by stronger collections from corporate income tax provisional tax and lower-than-expected value-added tax (VAT) and personal income tax refund payments. “This was offset by lower-than-expected collections from customs taxes, pay-as-you-earn and the general fuel levy.”

For a detailed analysis, visit: https://www.sars.gov.za/whats-new-at-sars/.

Now, with a renewed revenue target of R1 840.8-billion, the Sars commissioner stated: “In pursuing the attainment of the 2024/25 tax revenue estimate of R1 840.8-billion, Sars will be unrelenting in its drive to engender voluntary compliance. “Critically, this pursuit is to ensure that intermediaries charged by law to collect taxes on behalf of Sars pay it over. Importantly, Sars is ready to act against those who wilfully and defiantly ignore their legal obligations by misrepresenting their true economic status. “Those who enable this conduct are equally culpable. Taxpayers who abdicate their legal obligations place a disproportionate burden on honest taxpayers. “Taxes play a critical role in cushioning the most vulnerable and destitute in our society. In this respect, voluntary compliance is sacrosanct.”

The commissioner added: “Sars will continue to intensify and deepen its existing administrative efforts. We will continue to use sophisticated data science and artificial intelligence (AI) to maintain the balance between service to taxpayers/traders, whilst managing risks to the fiscus by detecting dishonest taxpayers.”

So, how will the revenue service do it? “Sars will deploy more data science and AI to step up its focus on the following areas of compliance risk: (i) broadening the tax base via third-party data sources, leveraging data from both formal and informal sectors to widen the tax base; (ii) working to register all taxpayers and traders, through predictive modelling to identify who ought to be on the register and to ensure they honestly file their declarations and pay their dues where necessary; (iii) building its detection capability using machine learning models and AI to significantly improve service and offer a seamless service to honest taxpayers (which will also be used to detect dishonest taxpayers, improve debt collection while expanding the tax base and deal with tax avoidance); (iv) enforcing trade laws against the illicit economy (customs and excise) through strengthening tools to detect and prevent illicit activities, including those related to tobacco, fuel, and illicit financial flows; and (v) focusing on dispute prevention and resolution [by] prioritising products and strategies that prevent disputes that can be resolved.”

The media release concludes: “Despite the tough operating environment, Sars expects that the start of a cycle of interest-rate cuts will spur consumption expenditure. “This expansion is expected to drive economic growth and widen the tax base, resulting in buoyant corporate tax and VAT revenues. Additionally, the introduction of the ‘two-pot’ system is expected to increase the tax base in the short to medium term.”

Are you still wondering for whom the going is going to get tough? If not, you will need to get ready.