Tax probe 'aims to take heat off credit downgrade'

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 yesterday, the national Treasury said the minister had approached President Jacob Zuma to urgently establish an inquiry into the tax administration and governance of SARS.

The Treasury stated the inquiry would help assess what factors were responsible for the SARS's revenue undercollection, and what needed to be done to improve the situation.

Keith Engel, SA Institute of Tax Professionals CEO, said the minister's 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," Engel said.

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

"The 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 ratings agencies.

"At this point ratings agencies don't want to see inquiries; they want to see action such as curbing expenditure," he said.