Finance minister Enoch Godongwana and Sars commissioner Edward Kieswetter have smoked the peace pipe, with the former now granting the latter an additional R7.5bn to bolster tax collection capacity over the next three years.
Godongwana announced the additional allocation to Sars when he presented his 2025/26 budget before MPs in the National Assembly on Wednesday after its postponement last month.
The historic postponement came after parties in the government of national unity objected to Godongwana’s plans to raise VAT by two percentage points to address a spending shortfall of R68bn.
In terms of the budget tabled on Wednesday VAT has now being hiked by half a percentage point from April 1, with a similar increase pencilled in for April 1 2026, which will see VAT increasing from 15% to 16% over two years.
The increases will help government raise R28bn a year as part of efforts to address its funding shortfall.
Tensions between Godongwana and Kieswetter spilled into the open at a press conference after the postponement of the budget on February 19 when the finance minister was captured in a “hot mic” incident speaking ill of the Sars commissioner.
This was after Godongwana was asked about his views on Kieswetter’s stance, expressed weeks before the postponement of the February 19 budget, that there was no need to hike taxes and instead at least R3bn should be allocated to Sars boost its capacity to go after R800bn in uncollected taxes.
This did not sit well with Godongwana, who said Kieswetter needed to stay in his lane of “tax administration”, while his was to determine tax policy.
But sources in government at the time indicated that the two had not seen eye to eye for several months now and Godongwana was depriving Sars of the resources it required to do its job while snubbing Kieswetter’s meeting requests.
Godongwana on Wednesday that after “the hot mic” incident, he has had at least three meetings with Kieswetter where they ironed out their differences.
With the hatchet now buried, Sars has been allocated R3.5bn for the 2025/26 financial year for it to boost its capacity to collect more taxes.
Both of us understand that the matter is now behind us, we are focusing on the job at hand
— Enoch Godongwana, finance minister
A further R4bn will flow into Sars's coffers over the next three years to fund its modernisation project.
Godongwana told MPs that Sars needed additional funding to collect “billions of rand” owed to the state in undisputed debt. Some 156,000 taxpayers remained unregistered or do not file tax returns despite their “substantial economic activity”.
Asked to comment on “the hot mic” incident, Kieswetter said his “conscience is clear” and his stance was consistent with the mandate of Sars.
“What I have spoken about is a consistent narrative and in line with the mandate of Sars and the commissioner,” he said.
“When these incidents happen, clearly how you deal with it matters. I’m a professional, I retain dignity and so I spoke to the minister privately and we had a good clarification session.
“There’s no issue between him and I right now. And we’ll continue to fight with him for more money,” said Kieswetter, with Godongwana seated to his right at the pre-budget briefing in parliament.
For his part, Godongwana would say he was glad the public clash between him and his tax chief was now behind them.
“Both of us understand that the matter is now behind us, we are focusing on the job at hand,” he said.
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