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FINANCE SELECT COMMITTEE
10 November 1999
REVENUE LAWS AMENDMENT BILL; MUTUAL BANKS AMENDMENT BILL AND THE ADJUSTMENT ESTIMATES: ADOPTION
Mutual Banks Amendment Bill
Revenue Laws Amendment Bill
Click here for a full briefing on the Mutual Banks Amendment Bill
Click here for a full briefing on the Revenue Laws Amendment Bill
Explanatory Memorandum: Adjustment Estimates 1998-1999
Explanatory Memorandum: Adjustment Estimates 1999-2000
[these documents are attached below]
The Committee adopted the Revenue Laws Amendment Bill, the Mutual Banks Amendment Bill and the Adjustment Estimates of both 1998-1999 and 1999-2000.
Revenue Laws Amendment Bill
Mr K Louw from the South African Revenue Services (SARS) briefed the Committee on the important amendment of the Bill. Mr Louw said the three main acts affected by this bill are the Income Tax Act, 1962, the Value-Added Tax Act, 1991, and the Customs and Excise Act, 1964.
Three major amendments to the Income Tax Act have been introduced. Firstly, the buy-back of shares by a company. This provision allows a company to buy back its own shares, which was not allowed under the previous provisions of the Act. Shares so acquired must, however, be cancelled as issued shares and be changed to authorised shares.
Secondly, the taxation of Long-term Insurers. Thirdly, clause 20 of the bill deals with the deduction of intellectual property.
The amendments to the Value-Added Tax Act introduce a second threshold, which is not voluntary, if the annual turnover is less than R20 000.
The amendments to the Customs and Excise Act link up with the trade agreement that will be finalised with the European Union. Furthermore the amendments also introduce a control measure as far as the mixture of paraffin and other oil substances.
Mr Conroy (NNP, Gauteng) asked whether the definition of vendor includes hawkers. Mr Louw said that the definition of vendor does include hawkers.
The Committee agreed to the motion of desirability and the Bill was adopted without amendments, but with the Democratic Party opposing the Bill.
The Chairperson thanked Mr Louw for his assistance throughout the process and requested that a programme be initiated by SARS to educate new members of the Committee on revenue issues. Mr Louw said that SARS would look into organising such a programme.
Mutual Banks Amendment Bill
Members agreed to the motion of desirability and the Bill was adopted without amendments.
The Reports on the Adjustment Estimates 1998-1999 and the Second Adjustment Estimates 1999-2000 were both agreed to by the Committee.
Since there were no further matters for discussion the meeting was adjourned.
EXPLANATORY MEMORANDUM: ADJUSTMENTS ESTIMATE: 1998/99
1. An additional amount of R400 million was included in the expenditure level for unanticipated expenditure not included in the 1998/99 Adjustments Estimate. It was indicated in the Budget Review that this amount would be authorised in terms of section 7(1 )(b) of the Exchequer Act, 1975 (Act 66 of 1975). However, section 7(2) of the Exchequer Act, 1975 stipulates that steps shall be taken, not later than the next ensuing session of Parliament, for the appropriation of any amounts which have been or will be utilized in terms of subsection (1). This amount must therefore now be appropriated by an act of Parliament.
2. The amount of R400 million was authorised for the following services:
2.1 Department of Transport - SA Rail Commuter Corporation (SARCC):
The amount allocated to the SARCC during the 1998/99 financial year was scrutinised by the Departments of Finance and State Expenditure and was found to be insufficient to maintain essential rail operations. In addition the interest rate increases during the year aggregated the shortfall of the SARCC. An additional 200 million was therefore allowed to be transferred to the SARCC in the 1998/99 financial year.
2.2 Free State Province - Outstanding commitments: R200 million
The Free State Province experienced a cashflow crisis and based on an intensive evaluation by a joint team consisting of officials of the Departments of State Expenditure and Finance in collaboration with the provincial treasury, it became evident that without financial assistance service delivery in the Province would be seriously hampered. On 12 March 1999 it was decided that a section 100(1)(a) of the Constitution, 1996 would be invoked on the Province and that an additional amount of R200 million would be made available to assist the Province with outstanding commitments reflected in the form of a bank overdraft.
2.3 Department of Housing - Housing Support Organisations
Amounts of R40 million for the SA Housing Trust and Ri2,5 million for
SERVCON respectively were included in the printed Adjustments
Estimate: 1998/99 for the Department of Housing. These two items were
indicated as column 2 items. In the Second Adjustments Appropriation
Act, 1998, the two amounts were combined under Contribution: Housing Support Organisations. The amount was, however, printed in the Act as
R52 500 and not R52 500 000. In order to ensure that the Department of Housing could spend funds as intended in the Adjustments Estimate: 1998/99, the Minister of Finance granted his authorisation in terms of section 7(1 )(b)(ii) of the Exchequer Act, 1975 for the column 2 item to be exceeded. Although no additional funds were required, an amount of R52 447 500 previously included in column 1 of the Second Appropriation Act, 1998 need to be shifted to column 2.
3. The Adjustments Appropriation Bill. 1999 is hereby tabled in Parliament for consideration.
[ed. Note: please email email@example.com for the Adjustment Estimate Excel spreadsheets to be emailed to you. Below are poor non-Excel copies of 2 of the 4 annexures available]
CALCULATION OF THE REVISED EXPENDITURE FOR 1999/2000 AND EXPLANATION OF THE INCREASE COMPARED TO THE EXPENDITURE PROVIDED IN THE MAIN BUDGET (BUDGET REVIEW)
This annexure has been compiled to give a complete overview of the total estimated
revised expenditure for the 1999/2000 financial year in R'000
A. Total Expenditure provided in the Main Budget
(RP 2) " 210,828,986 "
Plus: Supplementary Estimate (Second Print)
Vote 4: Agriculture " 25,000 "
Vote 7: Constitutional Development " 3,000 "
Vote 12: Finance " 17,000 "
Vote 15: Health " 28,000 "
Vote 16: Home Affairs " 17,000 "
Vote 18: Improvement of conditions of service " 2,999,999 "
Vote 21: Labour " 50,000 "
Vote 27: Public Works " 274,000 "
Vote 29: SA Police Service " 17,000 "
Vote 35: Water Affairs and Forestry " 120,000 "
Vote 36: Welfare " 50,000 " " 3,600,999 "
Estimate of Expenditure (RP 2 & 4) (Budget Review) " 214,429,985 "
Plus: Standing appropriations " 50,000 "
Donor funding " 750,000 "
B. Total Estimated Expenditure " 215,229,985 " 1)
Plus: Adjustments Estimate
To be voted (RP1—1999) " 6,557,906 "
Statutory amounts " ( 1,564,700 )"
Parliament (One month's salary to outgoing MP's) " 3,300 "
Finance (State debt) " ( 1,568,000 )"
Umsobomvu Trust " 855,000 "
Donor funds " ( 400,000 )" " 5,448,206 "
Less: Roll-overs " ( 2,125,000 )"
C. Total Revised Expenditure " 218,553,191 "
D. Increase (C - B) " 3,323,206 "
1) Amount indicated as total expenditure " 215,229,985 "
"Plus: Poverty relief, infrastructure investment and job summit projects " 450,000 "
Plus: Contingency reserve " 1,100,000 "
Total estimated expenditure according to Budget Review " 216,779,985 "
Increase can be ascribed to:
(i) Externally funded services " 61,912 "
(ii) Expenditure already announced " 450,000 "
(iii) Adjustments by Treasury " 1,691,475 "
(iv) Roll-over of funds " 521,666 "
(v) Over-expenditure (unforeseen and unavoidable) " 143,153 "
(vi) Umsobomvu Trust " 855,000 "
(vii) Donor funds " ( 400,000 )"
" 3,323,206 "
The details of the above-mentioned amounts are as follows in R'000 :
(i) "Externally funded services - R61,912 million"
The following externally funded services are included in the Adjustments Estimate:
Domestic grants received for human resource development " 34,891 "
Proceeds from the sale of products - Correctional Services " 1,691 "
Purchase and sale of SANDF helicopter and optic system " 12,080 "
Upgrading of SAPS vehicles " 10,250 "
Catering income of Parliament " 3,000 "
" 61,912 "
(ii) Expenditure already announced - R450 million
Allocation of unallocated part of funds provided for poverty
" relief, infrastructure investment and jobs summit projects" " 450,000 "
(iii) "Adjustments by Treasury - R1 691,475 million"
Increased allocation to Provinces for debt redemption and
backlogs in rank and leg promotions " 1,419,700 "
Special provincial projects " 69,000 "
Increased allocation to Local Authorities to address
Y2K issues " 202,775 " " 1,691,475 "
(iv) "Roll-over of funds - R521,666 million"
"Lower expected roll-out of funds - an amount of R2 646,666 million is rolled"
" over from 1998/99 while a saving of only R2,125 billion is expected in"
in 1999/2000 for financing " 521,666 "
(v) Over-expenditure (unforeseen and unavoidable)
"- R143,153 million"
Parliament " 3,592 "
Constitutional Development " 15,000 "
Defence " 47,000 "
Education " 5,500 "
Environmental Affairs and Tourism " 1,200 "
Finance " 444,422 "
Foreign Affairs " 97,792 "
Government Communication and Information System " 1,200 "
Home Affairs " 14,016 "
Improvements of conditions of service " 250,000 "
Justice " 147,805 "
Labour " 15,000 "
Public Enterprises " 6,624 "
SA Police Service " 94,315 "
Sport and Recreation " 31,100 "
Transport " 457,000 "
Water Affairs and Forestry " 85,514 "
Welfare " 5,000 "
Presidency " 13,000 "
" 1,735,080 "
Statutory amount " 3,300 "
Savings indicated by departments " ( 27,227 )"
Decrease in State Debt costs " ( 1,568,000 )"
See Annexure B for details " 143,153 " (1)
(vi) Umsobomvu Trust - R855 million
Transfer of funds obtained from demutualisation of insurance companies "855,000"
(vii) Donor funds - Decrease of R400 million
An amount of R750 million was included in the expenditure level while it
is expected that only R350 million will realise. " ( 400,000 )"
(1) Details are included in Annexure B.
DETAILS OF UNFORESEEN AND UNAVOIDABLE EXPENDITURE
TO BE PROVIDED FOR IN THE ADJUSTMENTS ESTIMATE
The amount of R143,153 million is compiled as follows:
Vote andService R' 000 R'000
Parmed Contributions 3,200
Equipment for disabled MP's 392 3,592
7 CONSTITUTIONAL DEVELOPMENT
Disaster relief in Western Cape 15,000
Operational commitments in support of SAPS 47,000
National Technical Examinations 5,500
11 ENVIRONMENTAL AFFAIRS AND TOURISM
Legal claim for fire damages caused by Nature Conservation 1,200
Incentive bonus payments (SARS) 301,422
New strategic objectives (SARS) 143,000 444,422
13 FOREIGN AFFAIRS
Inauguration of the President 44,000
Commonwealth Heads of Government Meeting 39,200
UN Peacekeeping contribution 10,492
Contribution to Commonwealth 4,100 97,792
14 GOVERNMENT COMMUNICATION AND INFORMATION SYSTEM
Operational expenditure, purchasing and upgrading of IT equipment 1,200
16 HOME AFFAIRS
ID Campaign (R8 m) and additional staff at airpo 8,537
Repatriation/deportation of illegal aliens 3,000
ID Task Team 2,479 14,016
18 IMPROVEMENT OF CONDITIONS OF SERVICE 250,000
Implementation of the Witness Protection Act 2,000
National Prosecuting Authority 37,474
Human Rights Commission 1,331
Legal Aid Board 107,000 147,805
Sheltered employment 5,000
24 PUBLIC ENTERPRISES
Upgrading of Office for Public Enterprises 6,624
29 SA POLICE SERVICE
Budget shortfalls relating to elections 94,315
30 SPORT AND RECREATION
7 th All Africa Games 31,100
Commuter Rail subsidies 432,000
Construction of Lubombo Spatial Development Initiative from
Hluhluwe to Mozambique 25,000 457,000
35 WATER AFFAIRS AND FORESTRY
Restructuring of forests managed by DWAF 85,514
Social Relief Fund 5,000
Restructuring costs of new Office 13,000
Plus: Statutory amount
One month salary to outgoing MP's 3,300
Less: Savings indicated by departments (27,227)
Decrease in State debt costs (1,568,000)
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