Question NW1581 to the Minister of Finance

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19 August 2016 - NW1581

Profile picture: Maynier, Mr D

Maynier, Mr D to ask the Minister of Finance

(a) What (i) was the total cost of implementing the Employment Tax Incentive (ETI), as introduced by the Employment Tax Incentive Act, Act 26 of 2013, (aa) in the (aaa) 2014 and (bbb) 2015 calendar years and (bb) since 1 January 2016 and (ii) is the estimated budget for the 2016 calendar year, b) how many jobs were created through the implementation of the ETI in each of the specified calendar years and c) for each job created in each of the specified calendar years, how many of the jobs created were (i) newly created and (ii) created for a period of (aa) less than three months, (bb) between 6 and 12 months, (cc) between 12 and 24 months and (dd) over 24 months?

Reply:

The South African Revenue Service provided the following information:

 (a) In general, tax incentive information is only available at least two years after employers submit their annual tax returns for a tax year to the South African Revenue Service (SARS) and most of the returns have been audited. Therefore, the data on the Employment Tax Incentive (ETI) that is provided is preliminary and could be significantly revised. The data for the last tax year and the current tax year are as per the monthly returns that employers submit to SARS for PAYE, which are very preliminary and subject to revision. The imminent review of the ETI will be the first comprehensive assessment to be conducted and it is expected to be completed by September 2016.

   (i) The total cost (tax revenue forgone) of the ETI since implementation on 1 January 2014 to 31 March 2016 was R6 623 million.

      aa. These amounts were claimed as follows:

            aaa. R1 882 million during calendar year 2014

            bbb. R3 330 million during calendar year 2015, and

      bb. R1 411 million from 1 January 2016 to 31 March 2016. The higher amount during the first three months of 2016 includes a correction for some understatements during 2015.

  (ii) The estimated tax revenue forgone for the 2016 calendar year is around R4 100 million (which includes the figure for the period 1 January 2016 to 31 March 2016, mentioned in bb above).

  (b & c)

An in-depth analysis of the estimated number of employees involved and jobs created is currently underway in the imminent review. During this review the efficacy of the ETI will also be studied. The National Treasury will provide the Standing Committee of Finance with a report of this review once it is available.

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