Speech by Dr Zukile Luyenge during the debate on the on the International developmental impact of the Taxation Laws Amendment Bill
09 September 2010
Lo mthetho usayilwayo Taxation Laws Amendment Bill wathunyelwa Standing Committee on Finance ukufumna izimvo zoluntu ngo May kulo nyaka. Siyi komiti siyabulela ngokungazenzisiyo kubo bonke abathabathe inxaxheba ngokusinika izimvo zabo ngalo mthetho usayilwayo. Ngokunjalo sibulela ngokungazenzisiyo ku Mphathiswa nebasebenzi be ofisi yakhe naku baqokoleli berafu (South African Revenue Services) ngomsebenzi omkhuli abawenzileyo ngoku sinika impendulo ezikhawuzeliyo kwi mibono esiyifumene ngexesha lezimvo zoluntu, eziye zancedisa ukuba sikwazi ukuthethisana saze safikelela ekuqhibeleni kwalomcimbi esingawo namhlanje.
Si ngumbutho ka khongolose, lo mthetho uyilwayo kufanele siwuxhase ngokuba ubaluleke kakhulu ukuze siqhubeke nokutshintsha isebe lethu lezerafu. Olutshintsho luza kusincedisa sikwazi ukuqhinisa ezorwebo jikelele nokuxhasa siphinde ziqhinise ukhulo nezo phuhliso kwixesha elizayo (medium to long-term). Oku ke sikwenzela ukuba sikhulise irafu yesizwe siphinde sinjonge izinye indlela zokukhulisa ingxowa yesizwe.
Sithethisana ngalolu tshintsho lwalwe rafu nje, masikhumbule ukuba siqala inyanga apho sibhiyozela amasiko nencubeko yethu. Isihloko salo nyaka sithi
" living out the values of a just and caring society". Esi sihloko salo nyaka sivumelana notshintsho lwe rafu lwanamhlanje. Akubonakali ukuba singakwazi ukuba sakhe ithemba lesizwe esikhathalelanayo ngaphandle kwe dlela elungileyo ye rafu. Ubuntu bethu njengabantu be sizwe sama Afrika buthi masikhathalelane. Isifundisa ukuba umntu ngumntu ngabantu kungoko ke kubalulekile ukuba sisi sizwe esikhulayo sakhele phezu kweziziseko zokukhathalelana. Kubalulekile ukuba singabahlali sivuselelane siphinde sibambisane ukwakha ilizwe lethu. Lento ke ibonakaliswe kukuzimisela ekuhlawuleni I rafu ngexesha elilo.
We welcome the fact that the Bill provides incentives to individuals who are conforming while at the same time putting in place mechanisms to address the potential for evasion by closing the loopholes for tax avoidance schemes.
The overall implementation of its provisions after it has been passed by this Parliament will be to bring enormous benefits to the economy by broadening our tax base.
Among other aspects the Bill addresses, are those which contribute towards the economic growth value chain such as individual and business taxpayers, savings mechanisms and employment. These have to be welcomed and commended as they will both directly and indirectly contribute towards the achievement of certain of our priority goals, in particular the creation of decent work and sustainable livelihoods. The ANC views tax evasion and avoidance not only as a crime but also a basis of building a culture of corruption in society.
In the main the Bill`s proposals seek to:
- tighten the rules relating to employer-provided motor vehicles with the aim of preventing tax arbitrage
- promote uniformity and avoid duplication in the implementation of the retirement and pre-retirement withdrawal pension benefits, by making the employer-provided lump sum termination payout, part of the tax-preferred calculation
- tighten the deduction criteria for key insurance plans which are commonly funded by employers in order to eliminate tax avoidance while expanding the deduction allowance for insurance policies that act as commercial collateral or payment to third party business creditors
- narrow the permissible instruments in the implementation of the interest exemption threshold and review its effectiveness as an incentive intended to promote savings by middle and lower income households
- place certain Shari`a compliant products such as Murabaha and Diminishing Musharaka on an equal tax footing with conventional finance products
- close the loopholes relating to financial institutions that are deducting beyond what should be equitably allowed according to the basis tax principles, when implementing laws dealing with interest expense allocation.
To the credit of our democratic Parliamentary processes, a number of changes have been made to some of these original proposals as a result of the comments and inputs received during the public hearings.
The following responses from the Ministry and SARS, changes were made to the draft legislation in the following areas:
- employer-provided motor vehicles
- narrowing of the interest exemption threshold
- interest expense allocation and
- terminating residential entities.
The original proposals on narrowing of the interest rate exemption threshold; and the anti-avoidance amendment relating to interest expense allocation, have both been withdrawn. This as a result of consideration of the motivations from the public comments received.
Acceptance of these comments and inputs from the public, and effecting changes as a result shows that indeed we are a people centered parliament and that we take our democratic processes seriously.
In conclusion, it is important to note the enormous benefits that the proposals contained in this Bill will bring to individual taxpayers, business and the economy as a whole. In particular we are happy that the proposal to promote uniformity and avoid duplication in the implementation of the retirement and pre-retirement withdrawal pension benefits has been concluded. This will ensure the employer provided lump sum termination payout, forms part of the tax-preferred calculation. This will benefit those who are faced with retrenchment. It would bring extra relief for these workers as it has the potential of bringing extra needed cash in hand to cater for their immediate economic needs.
Our historic trend in tax collection over the last few years has been the lowering of personal taxes, bringing relief to the low income groups whilst at the same time managing to broaden our tax base through better collection methods.
Credit in this regard needs to go to our government the Ministry of Finance and the South African Revenue Service for continuously improving tax collection methods.
ANC supports the Bill
I thank you!