Taxation Laws Amendment Bills [B19-2011]; Government Employee Pension Fund Law Amendment Bill [B15-2011]: Committee discussion

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Finance Standing Committee

28 August 2011
Chairperson: Mr T Mufamadi (ANC)
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Meeting Summary

The Committee briefly discussed whether they should proceed with deliberations on the Taxation Laws Amendment Bill before their next engagement with National Treasury at which they were to receive a report-back. Members felt that they required more time to familiarise themselves with the considerable amount of documentation they had received, including the submissions from the public hearings process.

A DA member said that National Treasury should give an indication of any changes to the Fiscal Framework that had been made subsequent to the tabling of the National Budget in February 2011. An ANC member drew attention to National Treasury's decision on Section 45 and questioned why the Committee had not been consulted on the final decision taken and what the role of the Committee was in giving policy direction. The Chairperson noted that these issues and the related matter of whether Parliament got involved at the level of endorsement or at the level of content deliberations, could be raised at the next meeting with National Treasury. It was decided to defer the deliberations to the following week.
The Chairperson sought the members’ opinion on whether there should be public hearings on the Government Employee Pension Fund Law Amendment Bill [B15 - 2011]. A DA Member commented that the provision for the extension of the pension fund to various categories of members, which would amount to approximately R5 billion, was a substantial figure and this should be given careful consideration. A COPE member was concerned about the 'clean break ' principle relating to divorce and that the use of a preservation fund should be enforced to promote the culture of saving and for individuals to make provision for their retirement. The Committee decided that public hearings were necessary.

Meeting report

Taxation Laws Amendment Bill
The Chairperson stated that the next phase of the Taxation Laws Amendment Bill was for National Treasury (NT) and the South African Revenue Services (SARS) to give a report-back. The purpose of the meeting was for the Committee to reflect on the submissions and their focus on the critical issues and the position adopted by NT. A second matter he raised was whether to go the public hearings route on the Government Employees Pension Fund (GEPF) amendment which had been presented the previous week. He noted the extensive documentation the Committee had received and that a summary had been circulated to members.

Ms Z Dlamini-Dubazana (ANC) said she appreciated the work done by the support staff but she felt that the Committee could not do justice to the documents and requested more time before they proceeded with their deliberations.

Mr D George (DA) said that questions on the process had arisen before and there were questions about the Budget Office and the Money Bill Amendment and Related Matters Act, to which certain amendments could be made. The process was that the Minister tabled his Budget in February and the Fiscal Framework attached to the revenue proposals. Subsequent to that, it went through the process where suggestions were made and changes may or may not be made at that stage. He noted that if changes were made, it impacted on the Fiscal Framework. When they had the discussions in Parliament on the Revenue Proposals and the Fiscal Framework, he had raised concerns that the DA had at the time and these concerns had featured in the Committee meetings as well. When Treasury returned he would like them to give an indication if any changes had been made and if so how had it impacted on the Fiscal Framework - as it would influence the way they saw the situation. He noted that it was a very large document and that it had been some time since February. Their memory might have faded since then and he thought it might be useful for them to reflect on what had gone before.

Mr D Van Rooyen (ANC) referred to observations he had made on the impact of Section 45. He felt that the Committee had not been given due recognition in the finalisation of Section 45. The decision on section 45 had been taken and they had all been surprised and it caught them off guard. Was it right for National Treasury to go ahead without engaging the Committee and consulting them? Section 45 was supposed to curb certain practices that were adversely affecting revenue generation. It was interesting to note that there were provisions to deal with such multiplicity. As to how those provisions were explored or utilised to combat such occurrences was a million dollar question to him and he believed NT should have taken the Committee into their confidence. How would the approach currently proposed by the Minister make the provisions more effective? He had singled out section 45 and what he was questioning was the way National Treasury operated and their relationship with the Committee. He had also raised the question of Swaziland and he had been asking himself what the role of the Committee was in terms of giving policy direction on some of these issues.

Mr N Koornhof (COPE) said normally, he found it more comfortable to listen to Treasury in terms of the report back and then they could take that together with the comments made by Parliament, discuss it and then have a final word with Treasury. What normally happened was that Treasury came to the Committee and informed them of the deal they had made with stakeholders. They would ask the Committee whether they liked it or not and then it proceeded to be debated in Parliament. He thought that maybe with this new effort by Parliament, the Committee could thank them for their input and inform them that the Committee would decide whether to adopt or reject the proposals and take it to Parliament for debating. Mr Koornhof concluded by stating that he could not make a proper contribution without knowing what had happened between Treasury and the stakeholders.

The Chairperson said that the proposal made by Ms Dlamini-Dubazana was generally supported by the Members and it would be better for the Committee to have a presentation by National Treasury as this had been the practice of the Committee. National Treasury could then give a report-back on their engagement with stakeholders and on other issues. Members could also familiarise themselves with all the relevant documentation before the deliberations which would be held the following week. At that interaction, the questions about section 45 and other issues, such as the role of Parliament and whether it got involved at the level of endorsement or the level of content deliberations, could be raised.

Government Employee Pension Fund Law Amendment Bill
The Chairperson referred to the Government Employee Pension Fund Law Amendment Bill [B15 - 2011] and asked members whether they should go the route of public hearings. If they thought it was necessary, they had to give the Committee secretary the latitude to advertise public hearings.

Mr George said that there were two parts to the amendment; firstly there was the divorce issue which he felt was fairly simple and he did not think there would be any objections. The other was about the extension of pension to various categories of members that would involve funds of about R5 billion, which was a substantial amount. He thought the Committee had to apply their minds on that some more. There was, for example, the case of special pensions and it had been proposed that there should be a means test as there might be members who qualified but did not necessarily need it. He suggested that it would add value to have views from the public.

Mr Koornhof said that he was more concerned with the 'clean break' principle after divorce. Questions had been put to Treasury about the 'clean break' and funds going to one spouse and nothing going into a preservation fund. There had been concerns that the money would go into a current account and there could even be divorces of convenience to pay off family debt. Feedback was awaited after consultation with Treasury on promoting the culture of saving and the culture where people took care of their financial needs for retirement. They were also awaiting responses on the proposals that the 50% should also go into a preservation fund. He felt that it would be worthwhile to invite people to comment on the Bill and especially the 'clean break' principle.

The Chairperson noted the members' agreement about having public hearings and he stipulated that it should be for one day only.

Ms Dlamini-Dubazana queried if it would be an open advert to the public and who the target group would be and whether it would result in an informative debate about the GEPF.

The Chairperson indicated that his understanding was that it was a general public advert for everybody and interested persons could register their interest in written or oral submissions or both. They would follow the normal practices relating to public hearings.

The meeting was adjourned.


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