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FINANCE SELECT COMMITTEE
5 November 2001
PROVINCIAL TAX REGULATION PROCESS BILL: FINAL MANDATES
Chairperson: Ms Mahlangu (ANC)
Provincial Tax Regulation Process Bill [B 51D - 2001]
Final Provincial Mandates [email email@example.com for mandates]
The Committee dealt with the final mandates of the provinces. All the provinces supported the Bill as is save for the Western Cape and KZN. The final mandates of these two provinces did not differ from the negotiating mandates except KZN now proposed a six month time frame for the Minister to decide on a proposed provincial tax (as opposed to the 60 days in the negotiating mandate). After discussion the Western Cape indicated that it supported the Bill even if its recommendations are not accepted. The Committee voted on the KZN proposals and rejected them, deciding the Bill should remain as is. The Bill was adopted by the Committee without amendments.
Mr Durr (ACDP) raised a concern that thus far he had received no written response to the issues raised by the Western Cape in their negotiating mandate.
The Chair replied that it was agreed that all members would go back to their provinces and discuss the issues. All the other provinces supported the Bill without reservations. For now the committee would deliberate the positions of these two provinces. She advised that she had spoken to Mr Anton Meyer, Parliamentary Law Advisor, about defining taxes, duties and levies as asked for by the Western Cape. He had said that it would be difficult because there is a very thin line between a user charge and a tax. Mr Meyer had pointed to the report by the Katz Commission that also concluded that it was not easy to define these terms.
Mr Durr said that his mandate is simple. The Western Cape supports the Bill but makes certain recommendations. His province would continue to support the Bill even if the Committee did not accept its recommendations. He said that it may be difficult but there are people who could apply their minds and come up with such definitions. If there were to be a definition, the competition and difficulties amongst provinces would be removed because everyone would know what they can and cannot do. If the definitions cannot be done now, perhaps they can be done in the future.
A KZN delegate believed that such definitions should not be included because there would be definitions in the provincial legislation - "It is fine that it is left broad as it is taken from the Constitution".
The next Western Cape issue unresolved was the deletion of the world 'only' in clause 5(2). KZN requested that its proposal in relation to the merging of clause 5(2) & (3) be dealt with now as it was the same clause.
Mr Kolweni (ANC) pointed out that all this had been discussed the previous meeting and asked that the final mandates be put to the Committee and it go forward from there.
The Chair replied that members have the right to raise issues. It needed to be dealt with now. If it is raised again now, it means that the provinces are not satisfied and therefore discussion is needed.
Mr Katla (Treasury) said that what is sought by KZN is already in the Bill. If the Committee wishes to choose between two drafting styles, the question needs to be asked if the Committee wants to go through the process of sending the Bill back to the National Assembly just for a change in drafting style. Merging 5(2) & 5(3) makes no fundamental change.
Mr Durr clarified his position and said that the Western Cape supports the Bill. As far as he is concerned the Committee is now dealing exclusively with the KZN mandate. He added that it was correct for KZN to argue for clarity by wanting to merge the clauses.
Mr Aulsebrook (KZN delegation) said that the Committee should not shy away from making amendments rather than becoming a mere rubber stamp of the National Assembly.
Another KZN delegate said that he was under the impression that the Bill would only be refereed back to the NA if there were substantial amendments and the merging of the clauses is not that. The Bill did not have to be sent back for crossing the t's and dotting the i's.
Mr Katla said that the KZN proposal was not just crossing the t's and dotting the i's.
The Chair asked Mr Palmer (State Law Advisor) for clarity.
He said that the Bill is a section 76(1) Bill. The NCOP can pass it as is or with amendments. If it is passed with amendments, it must go back to the NA.
Mr Durr said that it is only a textual amendment and suggested that KZN reconsider its proposal. Time frame is an issue as it is almost the end of session. It is true that the Committee can send it back if it so wishes but since there are time constraints and because it is a textual amendment, he suggested that the Bill moves forward.
The Committee voted on the KZN proposal and all the members agreed that the wording be left as it stands in the Bill.
The next KZN proposal was on Clause 3(6)(a) in the Bill. Its proposal in its negotiating mandate was for a 60-day time frame for how long the Minister can take to form a view on a proposed provincial tax. In the KZN final mandate, due to discussions in the previous meeting, it had revised its proposal and changed it to a 6-month time frame.
Mr Katla said that tax experts say that after the Budget Council meets on a proposed tax, there may still be issues that need to be clarified and the department therefore stands by the wording in the Bill.
Mr Momoniat said that the Budget Council meets about twice a year. Taxes are extremely complex. He gave an example of a surcharge on personal income tax. If a province proposed this then the equitable share formula has to change and the proportions change. There are many complexities and a considered view needs to be taken therefore a time frame is not appropriate.
Mr Aulsebrook said that he acknowledges the complexities but the process outlined is too open-ended and all the provinces want is when a view is formulated that they can get an answer without delay.
Mr Katla replied that the KZN recommendation is restrictive The Treasury has taken the middle road. The Bill contains the requirement that at intervals agreed to by the Minister and the province, updates must be given on the progress of the evaluation. This is sufficient to deal with the KZN concerns and there is no case to say that the provinces are prejudiced.
Mr Aulsebrook asked what was a reasonable period if six months was not?
Mr Momoniat said that it would depend on the tax. In some cases 90 days would be enough.
The Chair put this proposal by KZN to the Committee. The Committee agreed that the Bill must be left as is.
The whole Bill was put before the Committee and all the provinces including the Western Cape and KZN indicated that they were in favour of the Bill. The Northern Province was the only province that did not vote because there was no official final mandate.
The meeting was closed.