Taxation Laws Amendment Bill [B39-2013]; Tax Administration Laws Amendment Bill [B40-2013]; Employment Tax Incentive Bill [B46-2013]: deliberations & adoption

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Finance Standing Committee

25 October 2013
Chairperson: Mr T Mufamadi (ANC)
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Meeting Summary

Members deliberated on the Taxation Laws Amendment Bill. Members agreed that the threshold for incentives on savings, suggested as being R350 000 in the Bill, should be raised to R400 000 in the future. As the provision would only come into force in 2015, as a way forward, National Treasury suggested that an amendment could be considered in 2014. The Democratic Alliance proposed that the clause dealing with incentives for research and development be deleted as the current legislation was adequate. This proposal was defeated. On the clause proposing an incentive for shipping companies, Members were told that government wished to encourage the registration of ships in South Africa. Members discussed the concept of e-commerce and the imposition of South African taxes on companies based overseas and interacting with South Africans via the internet. The DA proposed that certain sub-clauses under clause 165 be deleted, but the proposal was defeated.

The Committee adopted its report accepting the Taxation Laws Amendment Bill without amendment.

The Committee deliberated on the Tax Administration Laws Amendment Bill. There was some discussion on the provision that premises could be searched without a warrant.

The Committee adopted a report accepting the Tax Administration Laws Amendment Bill without amendment.

The Committee deliberated on the Employment Tax Incentive Bill. Members noted that there seemed to be a different version presented to Parliament than had been the subject of public hearings. The DA put forward a proposal, based on Treasury policies, to limit the powers of the Minister regarding the implementation of the youth wage subsidy. There was a contrary opinion that parliamentary oversight would prevent malpractices and the DA proposal was defeated.

The DA proposed that clause 4 be deleted as this would discriminate against temporary workers. Members were informed that plant agreements could be reached, and the threshold of R2 000 would be compared to the daily rate of workers employed on a part-time basis. The proposal was defeated.

Members discussed the provision that subsidies be granted to employers taking on unemployed young people. The DA proposed that this provision be extended to include young people already in employment, with a counter-proposal from COPE that the provision be extended, but only to those in employment at the date that the youth wage subsidy had been mooted. There was no support for the counter-proposal and the DA proposal was defeated as well. A technical error was noted in an incorrect reference to another Act. Members resolved to include a recommendation in the report that the Minister move a technical amendment from the floor when presenting the Bill.

There was lengthy discussion over clause 12, which made provision for the Act to expire on 1 January 2017. Members generally agreed that this was not good law, especially as it would affect the incoming Parliament. However, deleting this clause would be a substantive change and might prevent the Bill from being adopted before the end of the year. Attempts to contact the Minister directly were unsuccessful. The majority of Members felt that the clause should instead be retained in the interests of expediency.

Members were informed that the South African Revenue Service did not have systems in place to handle the repayment of tax incentives. The DA proposed that the sub-clause in clause 14 that would delay the implementation of this incentive be deleted, as back-payments could be made once the systems were in place. The proposal was defeated.

The Committee Report on the Employment Tax Incentive Bill was adopted, with the objections of opposition parties noted. A recommendation was included on the incorrect citation, which would have to be amended when the Bill was tabled in the House.

Meeting report

Taxation Laws Amendment Bill: deliberations
The Chairperson asked Members to consider the Taxation Laws Amendment Bill [B39-2013] Members discussed certain clauses and raised proposals. There was no discussion on any of the other clauses.

Clause on threshold of taxable savings
Mr N Koornhof (COPE) said that the threshold of R350 000 was low and this would be a tax on savings. This would be sending the wrong message, and would be unfair if this remained at R350 000 on 1 March 2014. He proposed that the amount be adjusted to R400 000. The Committee could ask for this to be considered.

Mr T Harris (DA) supported this proposal.

Mr D van Rooyen (ANC) also supported the proposal. Members had applied their minds thoroughly on the issue of taxation of Members. He asked how National Treasury (NT) had arrived at the figure of R350 000. He fully agreed that the figures were scary and would impact even more on Members of the Executive than Members of Parliament.

Ms Beatrice Gouws, Director: Personal Income Tax & Saving, National Treasury (NT), provided an explanation even though she was more on the legal side. The figures were calculated on a replacement ratio. On retirement, a person would like to receive about 70-80% of earnings at the time of retirement. Once retired, many expenses fell away and it was no longer necessary to provide for retirement funds. Deductions were designed for expenses relating to generating income, and not for private expenses. There had been an incentive for medical schemes. Government wanted to see people saving towards their retirement. By granting the incentive, government would be foregoing tax. At present the threshold was 15% on non-retirement savings. Having a percentage threshold was not sufficient and Treasury had decided a monetary figure was needed. A figure had been arrived upon that was felt to be not too affluent. Many people only started making provision at a late stage of their lives. In fact, there had been a thought that R350 000 was actually on the high side.

Ms Ismail Momoniat, Deputy Director-General (DDG): Tax and Financial Sector Policy, NT, said that it was a deep issue. The R350 000 brought in questions of equity. Only high earners would have savings of this magnitude. It might be negative at the higher end. There had been a lower limit initially of around R200 000. The provisions would only come into force in 2015 and would not affect Members the following year. As a way forward, an amendment could be considered for the following year.

Mr Koornhof would accept this.

Clause 29
Mr Harris proposed that clause 29 be deleted. He was not in favour of the retrospective issues raised in the Bill. The existing tax laws on research and development (R&D) should be retained. There were false claims, but he felt that this was a small price to pay in order to preserve the world leading research and development conducted in South Africa.

Ms Z Dlamini-Dubazana (ANC) said that the Committee had agreed on clause 29. There had been favourable comment during the public hearings. The trials in the development of medicine were quoted as an example. She could not understand why this clause should be deleted after all the effort.

Mr D Ross (DA) said that the proposal of Mr Harris was to refine the legislation.

Mr van Rooyen was standing by his earlier comments. To remove this whole clause without comparing it to the principal Act would nullify the good work done earlier.

Mr Harris heard the concerns of Members. The existing tax laws were well written regarding R&D. It was true that false claims might be made. Parliament should accept this cost in the interests in providing a favourable climate for R&D. By deleting clause 29, the existing generous provisions for R&D would be retained.

Mr Momoniat said that there was no attempt to narrow the provisions. The clause had been crafted to eliminate abuse. The date had been changed. However, the current dispensation was too broad and subject to abuse. Issues on pilot plants and prototyping had been included. These were probably the most technical Bills. The proposal of Mr Harris would be a major change, and would undermine the approach to eliminating abuse.

Mr Harris said that the Committee had done everything it needed to. Members had applied their minds and were now deliberating on the law. His party did not feel it necessary to tighten up on the law. Generosity was needed in this regard. The international standard was 2% but in South Africa it was 1%. The price paid for abuse was worth it to encourage R&D.

The Chairperson called for a vote. Two Members voted in favour of the proposal and one abstained.

Clause 41
Mr Harris wanted some guidance from NT. He was satisfied that the tax incentives for shipping should be extended to South African ships. There was a suggestion from the public hearings that the provision was not broad enough. As he understood it, the provisions would not apply to South African citizens working on South African flagged ships.

Ms Gouws said that there would be a disparity between South African Government ships and international ships. Administratively it would be difficult to distinguish between the two categories. The intent was to encourage companies to register ships in South Africa. The intention of the clause was to promote fairness. From a cost viewpoint it would be better to have an across-the-board approach.

Clause 165
Mr Harris said that it was important that those doing business in South Africa, even if doing so from abroad by electronic means, should be liable for value added tax (VAT). Unless a multi-lateral approach was taken, large retailers could decide not to supply South Africans in future. He was thinking of a company such as Amazon. They had a significant chunk of the e-commerce market. The implications of Amazon withdrawing their business should be thought through. Sub-clauses 1(d) and (e) should be reconsidered. A multi-lateral approach should be taken together with the policies in other countries.

Mr Koornhof said that the South African industry was in favour of this proposal. There was a problem with other legislation. He could not see Amazon withdrawing. He understood what Mr Harris was saying, but could not foresee the same consequences.

Mr van Rooyen said that South Africa could not wait for other countries to legislate on this matter. There could be consultation later. There had been support at the public hearings in support of this measure.

Ms Dlamini-Dubazana took the point made by Mr Harris. She asked that NT look at this. Overseas-based companies were offering competitive prices.

Mr Harris said that public hearings were valuable. The most effective presentations he had heard had been from two ladies from Naspers for the imposition of this tax. Lower prices were a benefit to South African consumers, who had not attend the hearings. Their interests should be considered before the shareholders of Naspers. The concerns of corporates should be considered, but more so those of ordinary consumers. He was not so sure that Amazon would not withdraw from South Africa. Such a move would benefit Naspers. He requested that NT report on a multi-lateral co-ordinated approach.

Mr Koornhof asked how one could leave cyberspace. He used AppStores as an example. At present he used the South African site rather than the one in London, but the local choices were more limited.

Mr Harris said that sub-clause 1(e)(4) defined what was meant by e-commerce. Amazon might well decide to stop delivering to South Africa.

The Chairperson agreed that NT should consider the matter.

Mr S Swart (ACDP) heard the concerns of Mr Harris, and agreed that NT should reconsider this clause because of the possible unintended consequences. There would be an impact on the consumer. It was a valid concern.

Ms J Tshabalala (ANC) was surprised by Mr Harris's stance, as he had been on the other side at the public hearings. She felt that the meeting should proceed.

Mr Ross seconded the proposal that the Committee tread carefully on this clause. Naspers was doing well. He complained about constant interruptions from Ms Dlamini-Dubazana.

The Chairperson asked Members to respect each other.

Mr Ross said that the principles of competition should not be ignored.

Mr Harris said that his proposal to delete sub-sections (d) and (e) stood. He asked if the Chairperson's remarks indicated that his proposal had been accepted.

The Chairperson noted the concern.

Mr Harris insisted that his proposal be considered formally by the Committee.

The Chairperson said that no Members except Mr Ross had supported the proposal. If there was no amendment then NT should proceed with caution.

Ms Tshabalala said that it was clear that there was not majority support for the proposal. The Committee had expressed its opinion.

Mr Swart said that a formal vote should be taken.

The Chairperson put the proposal to delete sub-clauses 1(d) and (e). Two Members voted in favour and there were two abstentions. The Chairperson accepted that the majority of Members rejected the proposal without calling for votes against.

The Chairperson read the Committee Report recommending to the House that the Bill be approved. It was adopted by Members.

Tax Administration Laws Amendment Bill [B40-2013]: deliberations
The Chairperson asked Members to consider the Tax Administration Laws Amendment Bill. Members discussed certain clauses and raised proposals. There was no discussion on any of the other clauses.

Clause 16
Mr Harris asked if the concerns on warrants of arrest, search and seizure had been addressed. There was provision to enter premises without a warrant.

Mr Swart said that the Portfolio Committee on Justice and Constitutional Development dealt with similar clauses regularly. There was a view that there must be a court order except in exceptional cases, as defined in the Criminal Procedure Act (CPA). This was set out in the proposed (4)(a)(iv)(aB). A strong motivation would be needed for the provisions in (a)(i)(aA).

Ms Gouws said that this was essentially a South African Revenue Service (SARS) matter.

Mr Momoniat said that there had been a constitutional issue leading to the amendment.

Adv Frank Jenkins, Legal Advisor to Parliament, said that an amendment to the Customs and Excise Act was the result of a court case. Judge Owen Rodgers had made a ruling in a case regarding an entry and search of a property of a warrant. There had been a question of premises designated as places of business, and this was a form of a surrender of the right to privacy. This had been ruled unconstitutional. Judge Rodgers had written a clause to guide SARS in this regard. There was a lot of overlapping but he could not say if the clause under discussion was 100% compliant.

Mr van Rooyen said there had been feedback from NT on 11 September as a consequence of the extensive deliberations on the matter.

Mr Swart found this information helpful.

Mr Harris was still concerned that (aA) required a warrant.

Mr Swart said that (aB) was a standard clause. A test of reasonable suspicion would be applied by the court. In this case, the courts had advised Parliament on how to proceed.

Clause 3
Mr Harris said that there had been a concern with clause 3.

Mr van Rooyen interrupted. He was not sure that Mr Harris should be allowed to reverse the process. Members had already adopted this clause. People in glass houses should not throw stones.

Mr Harris said that clause 3 referred to an assessment being made within six years. He asked if the original Act had been changed to read six years.

Ms Gouws said that the only insertion was the wording 'a period not exceeding'. The six year period was already in the Act.

The Chairperson read the Committee Report agreeing with the Bill. Members accepted this.

Employment Tax Incentive Bill [B46-2013]: deliberations
The Chairperson asked Members to consider the Employment Tax Incentive Bill. Members discussed certain clauses and raised proposals. There was no discussion on any of the other clauses.

Mr Harris said that his party would propose several amendments. He had prepared written copies for the information of Members.

Mr van Rooyen said that the clause by clause process should not be compromised.

Mr Harris said that the spirit of the amendments was to prevent the effectiveness of the incentives being watered down. In particular the concept of the youth wage subsidy must be considered.

Mr Swart said that there was no Memorandum in the Bill. This was not strictly necessary although a bit strange.

Ms Gouws said that a complete explanatory memorandum would be issued. Employers would need a guideline to interpret the Bill.

Mr Harris said that the Bill had been introduced the previous day. Public hearings had been held on a different version of the Bill. He asked if the current Bill had been ventilated publicly.

Mr Momoniat said that there needed to be a procedure to amend the money bills. The draft versions were published on the website for comment. Unless it was a technical refinement, the Minister would need fourteen days to comment.

Mr Harris asked if the legal advisor agreed with this.

Adv Jenkins said that there was adequate compliance by having hearings on the draft Bill.

Clause 3
Mr Harris proposed that sub-clause 3(c)(ii) be deleted. The Minister would be empowered to make policies regarding employment subsidies contrary to legislation. Too many conditions were being added. This sub-clause should be deleted to make the incentives as widely available as possible.

Mr Ross seconded the proposal.

Mr Momoniat responded that the approach was not to make this provision mandatory. This Bill could have been written better. It was trying to deal with a range of concerns. One route would be to amend the Bill later to cater for training. For the first phase, however, it should not be an obligation. The intention was that many small businesses would take up this source of funding. The trade unions had made strong comment on this matter. NT wanted to demonstrate its intent on training issues.

Mr Harris understood what the DDG was saying. If the Bill was to effect young people in numbers, the legislation could not be allowed to prevent young people from gaining work experience. He was not convinced by the DDG's response and his proposal stood.

The Chairperson asked what the problem was.
Mr Harris said that the clause would impose extra burdens by allowing the Minister to institute administrative burdens at some point. This was in contrast to the spirit of creating employment.

Ms Dlamini-Dubazana said that the word 'or' in (c)(i) implied that (ii) was a continuation.

Mr van Rooyen said that the conditions were regarding specific interventions regarding training. If the powers of the Minister were removed, there might be a present or future situation. One issue raised by labour was that the absorption of the youth would not result in a skills transfer. He did not see any harm in leaving this provision in the Bill.

Mr Koornhof said that he did not feel comfortable assigning regulatory powers to the Minister. He could live with the current clause as the Minister would attract criticism if he applied the regulations in an unfair manner.

Mr Harris replied that he had used NT's own policy as a guide. The National Economic Development and Labour Council (Nedlac) might disagree, but he thought the policy was excellent. As many people needed to benefit as possible, and giving the Minister too much power might hamper this. While he trusted the current Minister, the same might not be the case with a future Minister. The subsidy should not be watered down.

Ms Tshabalala did not see anything wrong with the current clause. It made specific provision for consultation between the Minister and the Minister for Labour. Legislation was not enough, and accountability was needed. The principle should be that there could be an amendment if the implementation showed flaws in the legislation. The proposal was based on an assumption.

Ms Gouws said that another consideration was that 3(c)(ii) was related to an experimental proposal. Regulations went through a process of consultation. The incentive was for a three year period only. She agreed that administrative burdens could be fatal, but did not think that this would be case in the first phase of implementation.

The Chairperson said that the issue had been debated in the public hearings. This legislation was the first of its kind. The environment where the Bill would be applied was still volatile. Tight management would be needed for the initial two year period. The proposal was relevant, but in the current situation it would be better to allow closer monitoring as envisaged in the current wording of the Bill. It was not a perfect situation and would be open to debate in the future.

Mr Harris noted that the power to review should be left with Parliament rather than the Minister, despite the convincing argument put forward by the Chairperson.

Mr van Rooyen moved that the clause be adopted in its current form.

Mr Harris felt that his proposal should be considered first.

The Chairperson said that even with the current wording, Parliament would still have an oversight role and could call the Minister to account.

Mr Harris did not agree. He accepted that the Minister should be given powers, as in (c)(i). He was worried about the added conditions in (ii) and still felt that it should be deleted. He felt that his proposal enjoyed support from more Members than the Chairperson thought he had.

The Chairperson said that a counter-proposal had been offered and seconded.

Mr Harris raised a point of order that his proposal should be considered.

The Chairperson asked how many supported the proposal. Two Members supported the proposal.

Mr Koornhof said that the correct procedure had now been followed. If this had been done from the start the Committee's time would not have been wasted.

Clause 4
Mr Harris said that clause 4 would mean that part-time workers, who most needed the support of the state, would be compromised. He quoted from policy documents which proposed that the subsidy should apply to all workers whether part-time or not. He proposed that clause 4 be deleted so that benefits could be extended to all young people.

Mr van Rooyen said government could not regulate in such a way as to approve slavery wages.

Mr Ross said that this clause would have a huge impact on temporary workers, who were a huge constituency. He seconded the proposal.

Mr Koornhof wanted to hear the explanation of NT. He asked if there would be any legal consequence to scrapping he clause. It would be unfair for an employer to fail to pay the minimum wage and then claim the incentive.

Mr Harris said that if there was a minimum wage in the sector, this had to be respected. His party supported that fully. However, some sectors did not have such determinations. A part-time worker earning less than R2 000 per month would not be subsidised. The NT policy had contemplated all young workers being subsidised.

Mr Momoniat said that part-time workers were covered as long as the wages were proportionate to the minimum wage.

Ms Gouws said that no workers were excluded. If a person worked for one day a month, then the salary for one day should be extrapolated to a monthly payment. They had not gone down to a level of hourly pay as this would create an unmanageable administrative burden. Where employees had agreed with an employer on a basic minimum level they could reach an agreement with an employer even if this was below the R2 000 threshold. Such a plant agreement would be binding. Failing this, the employer would have to pay a minimum wage of R2 000 in order to qualify for the subsidy.

Mr Harris said that an artificial sub-minimum was being introduced. Not all workers could negotiate a plant agreement. He still felt that clause 4 did not add to the Bill.

Mr van Rooyen felt that the drafting could be better, but this was very much an experiment. Broadening the provisions could also be a problem.

The Chairperson noted two votes in support of the proposal. A counter-proposal that the clause be retained was accepted with the objections of the DA noted.

Clause 6
Mr Harris said that the word 'or' should be included at the end of (a)(i).

Ms Gouws said that it was a drafting convention that where there was a list of items, the word 'or' or 'and' would only be used after the penultimate item.

Adv Jenkins confirmed that this was correct.

Mr Harris said that the Refugees Act had been cited incorrectly.
Ms Gouws noted this. He was correct and a technical amendment would have to be made.

Mr Swart asked what would happen if one of the DA proposals were to be accepted. If the Bill had to be returned to the Minister, then the Bill might not be passed before the end of the year. There were some compelling arguments, but he had reservations about the process. He had been in two minds over the proposal to delete clause 4 because of this.

Adv Jenkins said that the Minister could make the correction. The Minister could propose such a correction when the Bill was tabled in the House. A technical amendment would make no changes in the meaning or objective of the Bill. The Minister should be given at least fourteen days to respond to any substantive changes to the Bill. There should also be compliance to the fiscal framework for a substantive change. The process should not be extraordinarily cumbersome.

Mr Harris said that some proposals had been put forward and should be considered.

Ms Tshabalala said that the issue raised was simply a technical correction by amending the reference to the Refugees Act. The best way would be if the Minister raised this in the House when presenting the Bill.

Mr Swart had a broader concern if more substantive amendments were raised.

The Chairperson said that there had been no substantive amendments to date.

Mr Harris asked if the Committee was agreeing on the technical change, and that the Minister would propose the change when the Bill was tabled in the House.

Ms Tshabalala said that the Committee had the right to make a technical amendment.

The Chairperson said that the Committee could not act on behalf of the Minister.

Mr Harris was still not satisfied. It was not good enough to hope that the Minister would make the correction.

Mr Swart said that the technical error should be included in the report. Members agreed on this.

Mr Harris raised a point under sub-clause (e). Current employees should also qualify for a wage subsidy. By far the most the most vulnerable group to substitution were young workers. Not subsidising such workers left them very vulnerable. He proposed that sub-clause (e) be deleted.

Ms Dlamini-Dubazana said that the Bill was designed to deal with the unemployed, not those already in employment.

Mr van Rooyen said that the proposal might further erode the tax base. If this were too open there would be revenue implications.

Ms Tshabalala said that it must be clear that the Bill was dealing with new entrants to the market. This was in line with the entry-level focus. She proposed that sub-clause (e) remain.

Mr Harris said that young workers might find themselves unemployed if the subsidy was only being applied to new workers. He felt that it was worth accepting a higher cost by subsidising the currently employed youth. The estimated cost per job was R37 000, which he felt was extraordinarily good value for money. The subsidy in the automotive industry was as high as R200 000 per job.

Mr van Rooyen hoped that he had heard Mr Harris correctly. If he was right, there was a penalty clause where substitution took place. The interests of older workers also had to be considered.

Mr Koornhof said that the first document had been published in 2011. He felt that the sub-clause should be retained, but the date should be amended to the date of publication namely 2011.

Mr Swart felt that this could be written off as a typing error and amended as a technical amendment.

Mr Momoniat felt that this would not work. There would be consequences for the fiscus. The date was set to be around the time of the Bill being implemented to prevent employers from exploiting the situation. This would be a dead weight loss in a sense. NT was trying to be fair. It was an experimental provision, but any amendment would be a substantive one.

Mr Ross said it was such a small paragraph but there would be huge consequences. He seconded the proposal.

The Chairperson said that the Committee was trying to close all the loopholes of abuse. It was not just about young workers, but also about displacement. There were measures to mitigate against employers abusing the system. He asked for the support for the proposal.

Mr Harris said that there were few decisions taken by the Committee that affected more than a million young people.

The Chairperson asked how an employer could consciously begin to act in such an unscrupulous manner. The counter-proposal of Mr Koornhof could not be entertained. Three Members supported the proposal of Mr Harris and the proposal was deemed to have been defeated. Sub-clause (e) would be retained, with the objection of the DA noted.

Clause 9
Mr Harris asked what would happen in a company ran out of pay-as-you-earn (PAYE) funds.

Ms Gouws said that there could be a roll-over. The amount of R6 000 would only be effective for those who were not tax-compliant. This would not apply to employers who were compliant.

Clause 12
Mr Harris said that clause 12 was in the nature of a sunset clause. It should be up to Parliament to review this matter on a constant basis.

Mr Swart objected to the clause as it made provision for the repeal within three years. This would place a burden on the incoming Parliament.

Ms Dlamini-Dubazana said that the Committee had agreed that this was an experimental Bill. It would be dangerous not to specify when the Act would lapse. The cut-off date of 1 January 2017 should be retained.

Mr Koornhof said that if the experiment worked well, it would be unwise to stop it in 2017.

Ms Momoniat said that there would be a review before 2017. It would be hard for government to stop these incentives if they were working. Trade unions had asked for limits. Experience might indicate the need to expand the incentives.

Mr Harris was not convinced. It was not good practice to apply a sunset clause on the incoming Parliament.
Mr Swart said that Parliament normally sat until the middle of November, and would be unlikely to be sitting on 1 January 2017. Special legislation would be needed to make an amendment on this date as it came closer.

The Chairperson said that the Bill would be reviewed in two years. He felt that this clause was not necessary as Parliament would review the implementation.

Mr Swart said that this was now a substantial amendment. The Minister did not have to wait fourteen days, but there was a practical implication.

Ms Tshabalala said that the Committee should recommend to the Minister that this clause be removed.

Mr Momoniat was worried that this might delay the Bill. This would certainly be a substantial amendment. He did not think that NT would object.

Mr Swart suggested that the three day rule be waived in this case so that Parliament could still debate the matter the following week.

Clause 14
Mr Harris said that the Bill would allow for a pay-out if an employer ran out of PAYE. The re-reimbursement section, section 10, would be delayed until some time when the Minister felt it should be introduced. He proposed that sub-clause (3) be deleted so that the entire Bill came into operation at the same date.

Ms Gouws said that the SARS systems would not allow for this. The current structure was through the employer tax system. There had to be a flow of funds from the employer to SARS. Once funding stopped, SARS needed a payment mechanism for people not on their register. SARS was preparing for the volume of requests in this regard but was not ready for this yet. She would love to see this being introduced immediately but this was not practical..

Mr Swart was concerned that there could be delays. The election was happening the following year, and the implementation could be delayed. The payments could be made later. The Minister had taken a strong stance on this matter but there could not be an inordinate delay. He asked why there was a dependency on the SARS system. Back payments were often made. The Minister could be called to account.

Ms Gouws wanted to see this done as soon as possible. The first payment could only be after January 2014, and this did not leave much time to put the system in place.

Mr Harris had checked the Income Tax Act. The process was simple. The block seemed to be an administrative system to process reimbursement. SARS operated regularly with back-dated payments. He was surprised to hear that SARS would not be ready, given their normal efficiency. The readiness date would probably not be far from the implementation date.

Mr van Rooyen would be worried if the benefits to employees would be delayed due to inefficiencies at SARS. He was nervous to insert a date. There would be complaints if there was a delay in implementation. He felt that the clause should be retained.

The Chairperson said that NT was very committed and had produced the legislation in a short space of time. He felt that NT should be given the benefit of the doubt on this issue.

Mr Momoniat had tried to speak to the Minister, but he was in the air. He had spoken to Deputy Minister Nene. Changes would be made before the date in the Bill, more likely towards the end of 2015. The incentive would probably be extended after that review. If the clause were deleted Parliament could still introduce legislation to curb abuses. The National Council of Provinces (NCOP) still had to consider the Bill.

Mr Harris said that the Committee was substantively in agreement to making the amendment. An inconvenience in timing was not an excuse to allow bad legislation. The first principle was to ensure the quality of legislation before worrying about the scheduling.

Mr Swart said that the Minister would move the technical amendment agreed upon earlier. The Committee should report its agreement to remove procedures. It was a straightforward deletion of clause 12.

Ms Tshabalala had proposed that this recommendation be made in the same way as the earlier technical amendment.

Adv Jenkins said that any amendment must comply with the Money Bill. The two amendments were different. The first could be done easily, but in the case of clause 12 the monetary consequences had to be considered. There was no idea of how much revenue could be gained or lost, and the House must be given the information to make an informed decision. This could be done easily if there was no financial implication, but if there was then the process would take longer. The Committee Report on the Bill could not be adopted if there was an outstanding issue.

Mr Momoniat asked if the Minister could make this amendment in the House.

Mr Swart asked if the fiscal framework would cover the period to 1 January 2017. This was only for a three year period.

Adv Jenkins said that the Minister could not move this amendment from the floor of the House. The Committee could ask for a review of the time process.

Mr Swart said that the Bill would not go through the NCOP process in time. That procedure would need to be shortened. The Committee must report that it was unanimous in agreeing on the deletion of the clause.

Mr Momoniat said that if the NCOP recommended any amendments the Bill would have to come back to the National Assembly (NA) Committee.

The Chairperson asked if clause 12 was a point of emphasis. It was understood that the Bill would be implemented on 1 January 2014, and would be in effect for three years. The reference to 1 January 2017 simply reinforced this time-frame.

Ms Tshabalala had been saying this from the beginning.

Mr Harris felt that this was a fundamental shift from what had been agreed on earlier. Procedural issues should not change the decision on the quality of the law. It was much more than a point of emphasis.

MS Dlamini-Dubazana had requested that the Bill was an experimental instrument and should have a defined life-span. The legislature would conduct oversight and make decision on this basis.

Mr Swart found himself between the proverbial rock and a hard place. Procedural considerations might force the Committee to retain the clause despite their objections. The Report must indicate the dissension now being raised.

Mr Koornhof said the Report could include a provision that the Committee must exercise an oversight role.

Mr Harris re-emphasised that the Bill must be written properly.

Ms Tshabalala said that all were agreeing in spirit that youth unemployment could not be dealt with in four years. Practically, the project had a finite lifespan.

Mr Momoniat had still not spoken to the Minister.

The Chairperson proposed that clause 12 be retained. The Committee would review the Act within two years.

Mr Harris wanted a decision on his proposal.

The Chairperson asked for a vote on the proposal to delete clause 12. Four Members voted in favour and five against.

Mr Harris reminded the Committee of the proposal to delete sub-clause 14(3).

The Chairperson noted that the majority was opposed to the proposal, and the clause would be retained in its current form with the objection of the Democratic Alliance. The Committee Report on the Bill would reflect the technical amendment to clause 6.

Mr Harris requested that the Report reflect the minority views as expressed by opposition Members.

The Committee Report on the Employment Tax Incentive Bill was accepted.

The meeting was adjourned.


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