Provincial Tax Regulation Process Bill: final Mandates

Meeting report

FINANCE SELECT COMMITTEE
1 November 2001
PROVINCIAL TAX REGULATION PROCESS BILL: FINAL MANDATES

Chairperson: Ms Mahlangu

Relevant documents:
Provincial Tax Regulation Process Bill [B 51D - 2001] (.pdf file)
Final Provincial Mandates [email [email protected] for mandates]

SUMMARY
Seven of the nine provinces indicated in their final mandate that they support the Bill. The Western Cape and Kwazulu-Natal stood by their negotiating mandate. The Committee discussed their mandates. The Western Cape indicated that they would support the Bill even if the Committee does not accept their recommendations. The Committee voted against the recommendations of KZN. The Bill was unanimously adopted by all the provinces including KZN. The Northern Province did not vote because they had no official final mandate.

MINUTES
Mr Durr (ACDP) said that there has been no written response to the issues raised by the Western Cape in its negotiating mandate.

The Chair said that it was agreed that members go back to their Provinces and discuss the issues and explanations that were raised at the previous meeting. The Chair was of the opinion that everything was clarified at the last meeting. She suggested that the Committee deliberate on the position of the Western Cape and Kwazulu - Natal.

Western Cape mandate
The Chair had spoken to the parliamentary law advisor, Mr Anton Meyer, in connection with
the Western Cape recommendation that definitions be added. Mr Meyer said that it was
difficult to define taxes, levies and user charges as had the Katz Commission.

Mr Durr said that the Western Cape's mandate is simple. They support the Bill but only make
certain recommendations. The Bill will still be supported if the Committee does not accept the
recommendations. He asserted that it might be difficult to define what a tax is - nevertheless it can be done. The definition will remove competition and difficulties amongst provinces because they will know what they can and cannot do. Mr Durr said that he accepted that it cannot be done in this piece of legislation but that it should be considered for the future.

A member of the KZN delegation commented that the provincial legislation would define the tax etc that would be introduced and that it was not necessary to define it now.

In relation to the deletion of the word 'only' in Clause 5(2), KZN said that its position should be discussed alongside the Western Cape's because it recommended that 5(2) and 5(3) be merged into one subclause.

Mr Kolweni (ANC) commented that all this had been discussed previously and that the mandates must simply be put before the Committee so that the process can go forward.

The Chair replied that provinces have the right to raise issues and that it should be dealt with now. The issues are raised today because the provinces were not satisfied and therefore discussion is needed.

Mr Katla (Treasury) said that the Western Cape and the KZN proposals were only a matter of a different drafting style and that there were no fundamental changes. Mr Katla questioned whether the Bill needs to be sent back for merely technical drafting changes.

Mr Aulsebrook (KZN delegate) said that the select committee should not shy away from making amendments and rather than just becoming a rubber stamp.

Another KZN delegate said that he was of the opinion that the Bill will only go back to the NA if there are substantial amendments not for crossing the t's and dotting the i's.

The Chair asked Mr Palmer (State Law Advisor) to clarify when the Bill goes back to the NA.

Mr Palmer said that the Bill was a section 76(1) Bill. If the Committee made amendments of any nature, it would go back to the NA.

The Western Cape position was clarified by Mr Durr who said that the Committee was now exclusively discussing the KZN mandate. He said that the KZN proposal in relation to clause 5(2) and 5(3) was only textual and suggested that KZN reconsider their position.

Kwazulu-Natal mandate
The Committee voted on the KZN proposal to merge clause 5(2) and 5(3) into one clause. All the provinces voted to leave the wording in the Bill as is.

The other issue raised by KZN was the time period that the Minister must be given to consider a proposal. The final mandate of KZN asks that the Minister be given 6 months to consider the proposal.

Mr Katla stated that the Department maintains its position as in the Bill. After the Budget Council meets, there might be issues that need clarifying. Even tax experts have said that the Minister might need lots of time.

Mr Momoniat (Treasury) said that the Budget Council meets at least twice a year so the provinces will know exactly the progress of the proposal. Taxes can be very complicated. For example, if a province adds a surcharge to income tax, there is no way that the work can be completed in six months. The equitable share formula would have to change and the portions of the provinces will change. All the provinces are affected and a considered view would be required.

Mr Aulsebrook acknowledged the complexities of certain taxes but said that the process in the Bill is open ended. All the provinces want is when the Minister formulates a view, the provinces want an answer.

The Committee member representing the Free State Province said that the time frames in the bill are reasonable, fair and flexible.

Mr Katla clarified that the KZN recommendation asks that the Minister be given 6 months from the first meeting of the Budget Council. This is too restrictive. The Department has taken the middle road to ensure that there is no undue delay by requiring that the Minister at intervals agreed with the provincial MEC's provide updates on the progress of the evaluation. The Bill is adequate in dealing with the concerns of KZN.

Mr Aulsebrook asked what is a reasonable time for the Minister to form a view.

Mr Katla replied that it would depend on the tax but that it would impossible to say what a reasonable length of time is. Some taxes could take less that 60 days and some could take much longer.

The proposal was put to a vote and all the provinces voted to leave the Bill as is.