Reply:

The National Treasury are not custodians of the commercial contracts between South Africa and other countries. If and should there be any goods and services contracts entered by the SA government it will be with suppliers in Russia, and that level of detail is not available in National Treasury but in the departments doing business with such suppliers in Russia.

Reply:

The Republic of South Africa has no exposure to the Russian Federation in respect of a loans, grants, donations and other forms of support.

Reply:

1. A Financial Recovery Plan (FRP) is currently in place at Mangaung Metropolitan Municipality. The municipality adopted a voluntary FRP in July 2018 but unfortunately there was no evidence that the implementation of the FRP translated into any meaningful improvements on any of the key focus areas. Subsequently, a new FRP was developed following the Section 139(5)(a) and (c) mandatory intervention invoked in December 2019 by the Free State Provincial Government. The mandatory FRP was implemented in 2020.

2. The municipality’s collection rate remained below the treasury norm of 95 per cent throughout the period of FRP implementation with an average of 86 per cent achieved for the 2020/21 audited financial year. Whilst the collection rate is still below the norm there has been a slight improvement from the 60-70 per cent collection rate reported previously. This indicates that the targets on the FRP to improve the collection rate is not fully yielding the desired results.

In the main, overtime expenditure is a challenge as the municipality is failing to properly plan, manage and control overtime payments and therefore the municipality is continuously overspending on this item. The municipality still has arrear debt with BloemWater amounting to R747 million and there is a revised settlement agreement in place that the municipality needs to align with the FRP targets. In addition, the provincial government owes the Municipality an amount of R1.9 billion for rates and taxes.

The Mangaung Metro is one of 43 municipalities in the country that have been identified to be in financial and service delivery crisis necessitating a mandatory intervention. Since the Mangaung Metro is already subject to a mandatory S139(5) intervention by the Province, measures are being considered to escalate the intervention into a National S139(7) intervention. Preparations are already underway to commence with a Ministerial visit to the municipality in the 1st week of April 2022. This will also be followed with a special induction session for the municipal council in early April 2022.

Reply:

In terms of section 160(d) of the Constitution, it is the mandate of the municipal council whether or not to approve borrowing. The National Treasury’s responsibility when a municipality decides to incur borrowing is set out in Section 46 of the Municipal Finance Management Act. In terms of that section, the National Treasury must submit written comments or representations in respect of the proposed borrowing. The National Treasury looks at a number of issues, including affordability, when providing written comments to municipalities. The National Treasury does not support instances where the borrowing is unaffordable for the municipality. Therefore, the municipality must have financial stability, and the planned borrowing must have been budgeted for before considering any borrowing.

Also, as emphasised in the Original Borrowing Policy framework passed by Cabinet in 2000, financiers/lenders are encouraged to perform their own due diligence assessments to ascertain a municipality’s creditworthiness. Financiers/lenders whose capital is at risk have both the incentive and the means to limit or deny credit if they doubt the sustainability of a proposed borrowing.

a) Project finance is part of the many funding mechanisms that have been identified in the 2017 Updated Policy Framework for Municipal Borrowing as mechanisms that are permissible within our current legislative framework. Municipalities can utilise project-based financing to fast-track infrastructure development; however, such a financing choice should be solely based on the strength of the municipality’s finances or the credibility of the assumptions and arrangements that inform the project package. Besides borrowing, municipalities may consider other funding mechanisms such as public-private partnerships to enable them to finance projects. In these types of transactions, the private party assumes the financial responsibility, amongst others, for the implementation of projects.

It is important to note that the updated policy emphasises that only creditworthy municipalities should borrow based on the strength of their balance sheets whilst encouraging responsible borrowing and lending. Therefore, municipalities deemed non-creditworthy (lack fiscal discipline and sustainable financial management; have no resources or capacity to repay the debt) should not borrow. This is further cemented by the principle of non-guarantee of municipal debt by neither provincial nor national government, as reflected in the updated policy and in section 51 of the Municipal Financial Management Act (MFMA). Incurring a loan when a municipality is not in the financial position to repay the loan will add to a municipality’s financial problems.

Municipalities have not pursued project loan financing but rather use general loans to finance various projects. This is mainly due to the capability of these municipalities in preparing bankable projects that would attract financing and the financial support required for project preparation activities. To assist metropolitan municipalities with funding for project preparation, the Programme and Project Preparation Support Grant was established in 2021 to institutionalise an effective and efficient system of developing a pipeline of investment projects that would be financed by an array of financing instruments, including project-based loans. To this end, National Treasury will allocate R1.1 billion to metropolitan municipalities over the 2022 MTEF to support project preparation.

b) In addition, to assist some of the municipalities facing financial difficulties, National Treasury has institutionalised the Municipal Financial Recovery Services with the core objective of identifying and resolving financial challenges, with the City of Tshwane and Mangaung being part of the programme. Through the success of the Municipal Financial Recovery Service and other initiatives around revenue management, National Treasury hopes to achieve strengthened operating performance for some metropolitan municipalities, thus allowing them to access the market and pursue mechanisms such as project-based loan financing.

Reply:

1(a) Mr. Mogajane, speaking at a post-Budget event said the following:

“We have to remind our leaders – and I’m speaking as a South African – who are in government, in public service and politicians to get off your high horse and do what we have to do to ensure we create access and a conducive environment for people’s lives to change.

If that’s not going to be a motivating factor, we can start calling SA a failing state because the things that define a failing state are beginning to show, where we don’t care about the poor and improving their lives.”

Mr. Mogajane was expressing his personal view on the corrosive impact that corruption has had on the state’s capacity to deliver basic services and warning of the consequences if our leaders fail to take action.

A failed state is a widely understood to be one that has disintegrated to a point where a sovereign government no longer functions properly and therefore cannot execute its basic responsibilities and deliver a minimum standard of living.

Whilst there is no formal framework that the government uses to test whether it is a failing state or not, the state’s ability to perform its basic functions and deliver the requisite level of services to its citizens is monitored, evaluated and regularly commented on, as is the case in many democracies. Examples include the Auditor-General’s annual reports as well as the recent reports from the Zondo Commission.

(b) Unfortunately, no details of this were attached to the submission. Could the Honourable member please resubmit the question with the relevant information to enable us to respond.

2 The National Treasury reviews the economy's outlook and associated risks as quarterly GDP statistics are made available by the relevant authorities. The economic outlook is made publicly available twice a year in the Budget Review and MTBPS. Risks to the outlook are closely monitored and subsequent developments considered in future economic outlook updates. As noted in Chapter 2 of the 2022 Budget Review, emerging geopolitical risks contribute to elevated uncertainty over the medium term.

With respect to the Russia-Ukraine conflict, the potential adverse effects to the South African real economy are likely to be fairly contained and mostly indirect if the conflict is not protracted. Historically, South Africa has recorded positive real GDP growth during periods when both Russia and Ukraine faced economic recessions, with the exception of global recession periods.[1] This suggests that the correlation between South Africa’s growth and Russia’s and Ukraine’s is not as strong, particularly during periods where economic movements are dominated by country-specific factors.

With the situation still developing and so much uncertainty, it is relatively difficult at this stage to quantify the potential impact with precision and confidence. However, South Africa’s trade statistics point to a very weak trade intensity between South Africa and Russia and Ukraine on aggregate. Less than 1 per cent of South Africa’s exported goods are destined for Russia and Ukraine combined. A similar number is reflected on inbound goods that are from both these countries. However, within certain industries, the trade exposure is more significant – such as exports of citrus, apples and pears products – where Russia is an important destination market.[2]

Despite relatively limited direct trade exposure to Russia and Ukraine, risks to the real economy could manifest through the import and export price channels given the importance of both countries in key energy and agricultural commodity markets. The persistent higher levels in these prices as suggested by the futures contracts[3] introduces renewed upside risks to the global and domestic inflation and interest rate outlook.

There are risks to the current assessment regarding the impact the conflict may have on South Africa. The risks largely depend on how long the conflict persists for.

1. For example, during the post-soviet market periods from 1994 to 1999 and during the Russia’s invasion of Crimea period, from 2014 to 2015. ↑

2. The diversion of volumes to other export markets or the domestic market could place downward pressure on prices and export earnings from the agriculture sector in 2022 following solid growth in the past two years. See: https://www.agbiz.co.za/content/open/14-march-2022-agri-market-viewpoint ↑

3. A futures contract is a standardised legal agreement to buy or sell something at a predetermined price at a specified time in the future. ↑

Reply:

	(i) Minister	ii) Deputy Minister
(a) Make	Mercedes-Benz	None
(b) Model	C-Class (C180)
(c) Year of manufacture	2016
(d) Price	R653 943.27
(e) Purchase date of each vehicle purchased since 29 May 2019	28 June 2019

Reply:

1. The Minister of Finance is currently considering the request for concurrence from the Minister of Public Enterprises in respect of the proposed amendments of rules for the PRASA sub-fund of the Transport Pension Fund.

2. The Minister of Finance will not make a statement on the matter. The outcome will be communicated to the Minister of Public Enterprises.

Reply:

Claim Type	*Backlog, i.e., Claims older than 60 days (Claims)	*Average time for processing (days)	(i) Total number of claims on hand	(ii) Average number of the days that claims have been outstanding in each case #
a) Withdrawal Claims	242	24	1 859	158
b) Retirement Claims	416	22	5 025	125
c) Death Claims	1 130	81	3 523	220

In relation to the question, kindly see below the Government Pensions Administration Agency response:

*Backlog cases are defined as cases older than 60 days.

*Age of claims vary depending on specific complexity of each case.

Reply:

No, the National Treasury did not undertake an assessment on the affordability of the SA Local Government Bargaining Council Salary and Wage Collective Agreement for the 2021-2024 financial years. National Treasury is not directly involved in the collective bargaining matters relating to local government wage agreements and the associated implementation costs. These are negotiated between the employer represented by the South African Government Association (SALGA) and Labour represented by various trade unions.

The National Treasury and Provincial Treasuries undertake assessments twice a year (before a budget is adopted and at mid-term of the financial year) on the ability of a municipality to fund its operating budget. These assessments include the affordability of salaries and wages as a component of municipal expenditure. In addition, the National Treasury also undertakes an annual assessment on the State of Municipal Finances and Financial Management to identify municipalities in financial distress.

Even before the start of the COVID-19 pandemic, there were already 166 municipalities in financial distress. On this basis, the National Treasury advised SALGA on the need for greater fiscal prudence given the decline in overall economic activity and the concomitant impact thereof on municipal revenues. The National Treasury expressed concerns in a letter to SALGA that there should be an exit clause which allows for exemptions from salary increases for those municipalities that cannot afford these such increases. SALGA provided an undertaking in this regard indicating that any municipality who cannot afford the salary and wage increase on the basis of their financial health reports will be allowed to use the exit clause in the agreement making it easier for the municipality to apply for an exemption.

Reply:

The National Treasury sets the overall expenditure ceiling for compensation budgets, which can be managed either through headcount adjustments or remuneration by departments. Wage agreements - for individual salary changes - in government are negotiated at the Public Service Coordinated Bargaining Council (PSCBC) with the Department of Public Service and Administration (DPSA) representing both the national and provincial government departments. Once the wage agreements are reached, a circular is issued by the DPSA to the rest of government for implementation. Adherence to these circulars is a requirement for government departments. In this regard, the Department of Transport is no exception.

The Driving License Card Account (DLCA) is a trading account of the Department of Transport, with an acting chief executive currently a deployed employee of the Department of Transport. The reasons for approval of the salary increases of four of its employees may be answered by the DLCA and the Department of Transport. The National Treasury ensures that departments stay within their allocated budget ceiling, whether this involves changes in staff numbers or unit cost of employment.

Reply:

(1)(a) Although the Minister of Finance is the custodian of the Municipal Finance Management Act, 2003, (MFMA), it is the policy adopted by the respective municipality or Metro that dictates the process or procedure to be followed for debt recovery. In this case, the policy will be the Credit Control and Debt Management Policy. National Treasury have been persistently advocating through various correspondence and budget circulars that debt owed to creditors by municipalities must be paid within 30 days as stipulated by Section 65(e) of the MFMA.

The City has informed National Treasury that majority of the debt owed by Soweto is to Eskom. National Treasury has no legal mandate to address the debt owed by consumers to Eskom, however, the Government through the Political Task Team Chaired by the Deputy President is addressing municipal debt owed to Eskom. It is the City’s responsibility to intensify its credit control and debt collection strategies to ensure that the debt owed by consumers is collected. Similarly, it is the responsibility of Eskom to implement its Credit Control and Debt Management strategy to achieve a sustainable solution to the recovery of Soweto arrear debt.

The City reported that the following measures are being institutionalised to collect the outstanding debtors:

• Councilor intervention in areas with limited access.
• Applying of strict control measures on customers who acknowledges their debt, by ensuring thorough affordability checks are done against each customer to determine the down payment and reasonable terms of payment.
• Intensify internal meter audits on accounts confirmed by entities as successfully disconnected.
• Promote support from the councilors during the City’s Open Days (to assist on educating customers about City’s relief programs and instant query resolutions); and
• Promote visibility of the Stakeholder Relations Officers to all the regions at all times (as the support for clear communication of the customers concerns in the entire value chain).

(1)(b) The City has informed National Treasury that it has embarked on a number of revenue enhancing initiatives to collect debt older than 90 days (this includes debt owed by Soweto residents). The City will be in a better position to provide the progress made so far in relation to revenue collection of debt older than 90 days. The City has intensified the credit control actions taken since December 2021 and January 2022 by issuing pre-termination notices and delivered it to most of the Soweto owing households. Disconnection of services have commenced after 14-days lapse of the notices delivered but with low return on investment, this is due to community disturbance to effect credit control measures. JMPD Officers have been called to provide security since the beginning of February by escorting the technicians to various areas wherein they are likely to experience backlash (trusting that their visibility will slowly show improved results).

2. According to the Section 71 of the MFMA reports for the second quarter ending December 2021, reports submitted to National Treasury by municipalities indicates that the total debt owed by municipalities to various creditors is R73.7 billion.

(3)(a)(b) Below is the list of municipalities with debt owed over R100 million as per the Local Government Data Base - Section 71 reports of the MFMA.

Reply:

The South African Revenue Service, in processing all refunds, will always seek to balance the protection of the fiscus from illegitimate refund claims and the optimal processing of all refunds that are legitimate. This balance is further enhanced when considering that more than R50bn in illegitimate refunds are prevented from flowing out of the fiscus every year through tight risk engine rules.

The following table depicts the ageing of the VAT credit book as at 31 December 2021. The month end reports run on the 3rd of the following month hence the report is dated 3 January 2022.

Age Bracket	Amount
0 – 1 Month	12 124 197 396
2 Months	8 096 487 168
3 Months	6 013 454 301
4 – 6 Months	10 972 108 740
7 – 9 Months	5 197 216 823
10 – 12 Months	3 993 203 326
13 – 24 Months	4 620 035 970
25 – 36 Months	1 181 352 081
37 – 48 Months	928 762 378
49 – 60 Months	717 706 100
60+ Months	2 358 401 594
Grand Total	56 202 925 877

It must be noted that 81% of the book is within 12 months whilst 45% is within 3 months.

SARS at any given time will have amounts outstanding on refunds for a number of reasons including the following:

1. Audit cases amounting to R39.9 billion,
2. Continues Non-Compliant CNC) amounting to R11.1 billion, *
3. Suspected fraud amounting to R0.369 billion,
4. Credits payable within 24 hours amounting to R2.6 billion
5. Outstanding Returns amounting to R1.8 billion, and
6. Invalid Banking details amounting to R0.5 billion.

* CNC includes cases where SARS is awaiting taxpayer response on long outstanding documents having granted in excess of 35 days for taxpayer to respond.

Reply:

The South African Revenue Service, in processing all refunds, will always seek to balance the protection of the fiscus from illegitimate refund claims and the optimal processing of all those refunds that are legitimate. This balance is further enhanced when considering that more than R50bn in illegitimate refunds are prevented from flowing out of the fiscus every year.

SARS has for the period ending 31 December 2021 paid R193bn in refunds of which 72% (R138bn) was paid within 21 days. It is worth noting that almost 80% of all refund claims are paid without audit or verification thus confirming our compliance theory that most taxpayers are honest and want to meet their tax obligations fully. The remaining 20% is the combination of those taxpayers who make genuine errors as well as those who unfortunately seek to defraud the fiscus. It must be noted that the law does not prescribe a minimum period for the completion of an audit or verification, therefore rendering the notion of overdue refunds a misnomer in law. However, SARS has committed to various turnaround times in its service charter in line with the desire to provide superior service to taxpayers.

The following table reflects the number of VAT credit returns submitted since March 2019 with total value and a column indicating credit balance in relation to those submissions. Some of the credits submitted will be outstanding and are reflected in the rolling credit balance. As can be generally noted on the percentage unpaid refunds, the amounts yet to be paid for these periods are much less than the original submission.

It must be noted that the unpaid refunds column is inclusive of all statuses i.e. cases where supporting documents have been requested and vendors have not submitted to date. Such vendors are categorized as Continuous Noncompliant (CNC). To date, SARS has over R11.5bn CNC cases for VAT which largely cannot be processed until the taxpayer responds to the SARS query.

As can be noted on the table, there is an increase in value of unpaid refunds from March 2021 onwards as reflected in the current balance per month which is in line with the increased number of return submissions and values coupled with an increased focus on the risk mitigation against refunds fraud (this focus in risk mitigation has resulted in R59 billion revenue protection across all tax refunds in current fiscal year). This is to ensure that SARS maintains the balance of protecting the fiscus from illegitimate refund claims whilst processing legitimate refunds. It must be noted as well that there are challenges experienced in matching the available capacity and the generated case load as the risk system responds to compliance risks that are inherent in the filed returns.

SARS at any given time will have amounts outstanding on refunds for a number of reasons including the following:

1. Audit within 21 days amounting to R8.5 billion,
2. Audit above 21 days amounting to R20.6 billion,
3. Continues Non-Compliant CNC) amounting to R9.1 billion, *
4. Suspected fraud amounting to R0.369 billion,
5. Outstanding Returns amounting to R1.8 billion, and
6. Invalid Banking details amounting to R0.5 billion.

* CNC includes cases where SARS is awaiting taxpayer response on long outstanding documents having granted in excess of 35 days for taxpayer to respond.

Reply:

(1) The South African Revenue Service, in processing all refunds, will always seek to balance the protection of the fiscus from illegitimate refund claims and the optimal processing of all refunds that are legitimate. This balance is further enhanced when considering that more than R50bn in illegitimate refunds are prevented from flowing out of the fiscus every year.

SARS has for the period ending 31 December 2021 paid R193bn in refunds and 72% (R138bn) was paid within 21 days, furthermore it is worth noting that almost 80% of all refunds claims are paid without audit or verification interventions thus confirming our compliance theory that most taxpayers are honest that want to meet their tax obligations fully. The remaining 20% is the combination of taxpayers who make genuine errors as well as those who unfortunately seek to defraud the fiscus. It must be noted that the law does not prescribe a minimum period for the completion of an audit or verification process, therefore rendering the notion of overdue refunds a misnomer in law however SARS has committed to turnaround times in its service charter in line with the SARS desire to provide superior service to taxpayers in order to bring about clarity and certainty on their affairs

 

Yes, SARS has some refunds that are outstanding. SARS at any given time will have amounts outstanding on refunds for a number of reasons, key amongst these reasons are 1) SARS is at various stages of the audit and verification process and 2) Taxpayer related issues including invalid banking details, instances of outstanding documentation where SARS has communicated in more than one instance with the taxpayer requesting such supporting documentation (these are continuous non-compliance cases) as well as instances of suspected fraud by the taxpayer. The sectorial view of the balance of refunds in audit in excess of 21 days is as follows:

Industry	Vendors	Sum of Balance
AGENCIES AND OTHER SERVICES	11718	-R 3,485,040,995.02
AGRICULTURE, FORESTRY AND FISHING	11228	-R 2,032,265,989.44
BRICKS, CERAMICS, GLASS, CEMENT AND SIMILAR PRODUCTS	338	-R 52,091,107.65
CATERING AND ACCOMMODATION	1827	-R 302,765,982.13
CHEMICALS AND CHEMICAL, RUBBER AND PLASTIC PRODUCTS	707	-R 362,900,673.78
CLOTHING AND FOOTWEAR	520	-R 67,148,930.30
COAL AND PETROLEUM PRODUCTS	555	-R 216,979,759.08
CONSTRUCTION	10316	-R 4,273,709,791.85
EDUCATIONAL SERVICES	471	-R 81,063,823.27
ELECTRICITY, GAS AND WATER	583	-R 261,615,811.24
FINANCING, INSURANCE, REAL ESTATE AND BUSINESS SERVICES	13678	-R 4,327,781,607.92
FOOD, DRINK AND TOBACCO	1630	-R 248,802,796.42
LEATHER, LEATHER GOODS + FUR(EXCLUDING FOOTWEAR + AND CLOTHING)	205	-R 20,001,623.97
MACHINERY AND RELATED ITEMS	1243	-R 304,557,104.71
MEDICAL, DENTAL AND OTHER HEALTH AND VETERINARY SERVICES	774	-R 218,844,178.05
METAL	437	-R 275,891,258.63
METAL PRODUCTS (EXCEPT MACHINERY AND EQUIPMENT)	529	-R 108,858,944.81
MINING AND QUARRYING	3990	-R 934,174,989.83
OTHER MANUFACTURING INDUSTRIES	719	-R 183,565,764.57
PAPER, PRINTING AND PUBLISHING	571	-R 98,998,679.73
PERSONAL AND HOUSEHOLD SERVICES	509	-R 177,524,560.34
PUBLIC ADMINISTRATION	236	-R 264,314,018.60
RECREATIONAL AND CULTURAL SERVICES	561	-R 75,341,201.10
RESEARCH AND SCIENTIFIC INSTITUTES	145	-R 24,340,885.13
RETAIL TRADE	4491	-R 707,260,203.27
SCIENTIFIC, OPTICAL AND SIMILAR EQUIPMENT	149	-R 60,521,555.14
SOCIAL + RELATED COMMUNITY SERVICES NOT ELSEWHERE SPECIFIED	785	-R 95,335,672.15
SPECIALISED REPAIR SERVICES	599	-R 94,216,037.19
TEXTILES	300	-R 62,412,722.77
TRANSPORT EQUIPMENT(EXCEPT VEHICLES, PARTS AND ACCESSORIES)	756	-R 338,988,730.81
TRANSPORT, STORAGE AND COMMUNICATION	3059	-R 757,966,821.77
VEHICLES, PARTS AND ACCESSORIES	1236	-R 240,996,838.88
WHOLESALE TRADE	3695	-R 1,740,906,434.94
WOOD, WOOD PRODUCTS AND FURNITURE	412	-R 46,556,690.16
Grand Total	78972	-R 22,543,742,184.65

The financing, insurance, real estate and business services accounts for the largest balance, followed by Agencies and other services, Wholesale Trade then Construction sector.

(2) SARS adopts a number of strategies to address the credit book backlog including but not limited to working overtime, repurposing of experienced staff to focus on audits and verifications, applying secondary risk tolerance and appetite based on taxpayer previous compliance track record and continued attempts to get taxpayers to comply with outstanding requirements in order to process refunds. SARS accepts that the balance of supply and demand is not always possible to maintain thereby leading to increase in inventory faster than the available capacity can handle. In this regard refinement of our risk approach is on-going.

Reply:

Yes, National Treasury keeps a record of the debt owed to creditors.

(a)(i)(ii)(iii) The tables (attached as Annexure A) provides the detail of the debt owed by municipalities to creditors for the respective years per province as per the Local Government Data Base - Section 71 reports of the Municipal Finance Management Act, 2003, (MFMA). This information is for the 2020/21 and 2021/22 financial years and the Annual Financial Statements for the 2019/20 financial year.

(b)(c) The column, “Year 2021/22 – Month 06” in Annexure A provides the year to date amount owed by each municipality. The total for municipalities is R76.6 billion (unverified). Due to the amounts being accumulative, it will be the same for total amount in debt as well as current total outstanding.

Reply:

The most recent update of the NHI cost model was carried out in 2019/20, details of which can be found in section 8 of the explanatory memorandum to the NHI Bill and the 2019 Medium Term Budget Policy Statement. This modelled the medium-term cost of specific NHI interventions at approximately R33 billion per annum by the 5th year. The economic impact of the COVID-19 pandemic has thus not been factored into the cost model. The need for and timing of further updates to the model will be determined by practical progress with preparing for the implementation of NHI, spending on the existing NHI allocations, as well as progress with processing the NHI Bill in the two chambers and relevant committees of Parliament.

Reply:

No, they have not been capped for good reason, given the complexity and potential unintended consequences arising from such measures. As you may be aware, Government has been totally committed to bringing down charges in the retirement industry to maximise benefits for members of such funds, as can be seen from the government policy paper titled Charges in South African Retirement Funds published in 2013. The paper found that the layering of many fees and costs, which were also opaque for certain products, was driving the high charges, and therefore clearly unfair to members of retirement funds since they were reducing their savings significantly by up to 40% over a lifetime in one scenario presented in that paper.

It is also recognised that structural reform issues were also driving costs, with too many funds (nearly 4 500), many of which only had small memberships and were not economical – hence the focus on consolidation, widening coverage and strengthening preservation to drive costs down. The recent December 2021 papers give further effect to these reforms.  The proposed reforms are in line with best international practices than direct measures like caps, which have limitations and could have perverse outcomes. Different countries are taking different approaches to regulating the fee structure of retirement fund providers.

Reply:

a) There are no conditions attached to the loan.

b) The loan has a 13-year repayment period including a 3-year grace period (period after the disbursement where no capital repayments are required). The interest rate of the loan consists of the 6 month Secured Overnight Financing Rate (SOFR) (currently at 0.05%) plus a 0.75% variable spread, for an all-in rate of 0.80%.

c) It is a budget supported loan to assist the government to deal with the impact of the COVID-19 pandemic.

Reply:

1. Appointed and Acting Deputy Directors-General

(a) i Deputy Director-General (DDG)

SURNAME	INITIALS	DESIGNATION	NT APPOINTMENT DATE	APPOINTMENT DATE AS DDG
SISHI	NE	DDG: BUDGET OFFICE	01/10/2007	01/02/2022
PIETERSE	DE	DDG: ASSET AND LIABILITY MANAGEMENT	01/09/2013	01/12/2020
VUMENDLINI	V	DDG: INTERNATIONAL & REGIONAL ECONOMIC POLICY	15/04/2010	01/03/2018
MODISE	MP	DDG: PUBLIC FINANCE	29/09/2009	01/11/2017
NGQALENI	MT	DDG: INTERGOVERNMENTAL RELATIONS	01/10/1998	01/01/2014
MNGOMEZULU	JS	DDG: CORPORATE SERVICES	01/11/2002	01/11/2011
MOMONIAT	I	DDG: TAX AND FINANCIAL SECTOR POLICY	01/01/1996	01/01/2001

(ii)Acting Deputy Director-General (DDG)

SURNAME	INITIALS	DESIGNATION	DATE OF APPOINTMENT AS AN EMPLOYEE OF THE NT	DATE OF APPOINTMENT AS ACTING DDG
MODISE	BM	ACTING DDG: ECONOMIC POLICY	16/01/2012	26/10/2021
FANI	MI	ACTING CHIEF PROCUREMENT OFFICER	01/12/2018	25/08/2021
MAREE	K	ACTING ACCOUNTANT-GENERAL	01/04/2011	13/12/2019

(b) Expected retirement age

SURNAME	INITIALS	DESIGNATION	EXPECTED RETIREMENT DATE
MODISE	BM	ACTING DDG: ECONOMIC POLICY	18/06/2050
MODISE	MP	DEPUTY DIRECTOR GENERAL: PUBLIC FINANCE	03/05/2048
PIETERSE	DE	DDG: ASSET AND LIABILITY MANAGEMENT	13/03/2045
SISHI	NE	DDG: BUDGET OFFICE	19/01/2042
VUMENDLINI	V	DDG:INTERNATIONAL & REGIONAL ECONOMIC POLICY	05/06/2041
MAREE	K	ACTING ACCOUNTANT-GENERAL	19/01/2041
FANI	MI	ACTING CHIEF PROCUREMENT OFFICER	23/07/2034
MNGOMEZULU	JS	DDG: CORPORATE SERVICES	06/08/2031
NGQALENI	MT	DDG: INTERGOVERNMENTAL RELATIONS	11/06/2024
MOMONIAT	I	DDG: TAX AND FINANCIAL SECTOR POLICY	19/08/2022

2. Regulated retirement age

(a) No employee is above the regulated retirement age.

(b) All employees are still within their regulated retirement age.

Reply:

The details of the spouses’ pension benefit cannot be provided due to the fact that such information is deemed to be personal and cannot be made available to third parties.

Members are encouraged to utilize the available GEPF channels to obtain information regarding their pension benefits such as the call centre (telephone number 0800 117 669); walk in centre facilities across the country (details obtainable on the GEPF website (www.gepf.co.za)) or via email at [email protected] to deal with enquiries.

 

Reply:

NATIONAL TREASURY

(a)(i)(aa)	(a)(i)(bb)	(a)(i)(cc)	(a)(i)(dd)	(b)	(c)
5 Supplier invoices	Nil	Nil	Nil	R9 228,78	Before end of February 2022
				R9 228,78
				R9 228,78
				R9 228,78
				R758 540,00

INDEPENDENT REGULATORY BOARD FOR AUDITORS

As at 11 February 2022 the IRBA is not aware of any invoice older than 30 days due for payment.

OFFICE OF THE TAX OMBUD

a) What number of supplier invoices currently remain unpaid each entity reporting to him for more than

(aa) 30 days, - None

(bb) 60 days, - None

(cc) 90 days - None

(dd) 120 days – None

(b) what is the total amount outstanding in each case - None

(c) by what date is it envisaged that the outstanding amounts will be settled? - None

GTAC

a) What number of supplier invoices currently remain unpaid by entity reporting to NT entity (GTAC)

Question no	No of invoices
aa) 30 days	0
bb) 60 days	0
cc) 90 days	0
dd) 120 days	0

b) what is the total amount outstanding in each case? Zero amount

c) by what date is it envisaged that the outstanding amounts will be settled? No applicable

GOVERNMENT EMPLOYEES PENSION FUND (GEPF)

The details of unpaid supplier invoices are listed below:

Number of unpaid invoices	30 days	60 days	90 days	120 days	Date to be paid
16	R1 300 729	R 2 450	R1 026 375	N/A	24 Feb 2022
Total Payable Amount R 2 329 554

ACCOUNTING STANDARDS BOARD

We have no unpaid invoices exceeding 30 days or more.

OFFICE OF THE OMBUD FOR FINANCIAL SERVICES PROVIDERS (FAIS OMBUD)

The following table provides the information as requested relating to the amounts outstanding to suppliers based on their aging.

No	Description	Current	1 to 30 days	31 to 60 days	61 to 90 days	Over 90 days	Total outstanding
1	Total outstanding	-	-	644,39	5 000,00	6 974,21	12 618,60
2	Number of suppliers	0	0	1	1	2	4
Refer to legends below			*	**	***

	Legends
*	The Office is awaiting the credit note of R644,39 from the supplier in order to remove the balance from the aging report. The adjustment of the insurance policy has given rise to the credit note.
**	The Office is awaiting the credit note of R5,000.00 from the supplier in order for the account balance to be corrected. The disposal of an asset resulted in the adjustment of the insurance policy which has given rise to the credit note.
***	An amount of R400,00 is owed to a supplier. However, given the inability to contact the supplier, it may seem that the supplier is no longer trading. Once confirmation of this is received, the financial records will be adjusted accordingly. The remaining amount is still in dispute with the supplier and payment will be effected once the matter has been resolved between the office and the supplier. The dispute relates to the non-delivery of certain goods.

Of the R12,618.60 reflected in our records, a total amount of R5,644.39 relate to credit notes that need to be received and processed. Therefore, this amount is not actually owed to suppliers. The remaining amount of R6,974.21 relating to two suppliers will be paid over to the suppliers once the dispute is resolved with the one supplier and the existence of the other supplier is confirmed.

FINANCIAL SECTOR CONDUCT AUTHORITY (FSCA)

(aa) 30 days,

Answer: None

(bb) 60 days,

Answer: One

(cc) 90 days,

Answer: None

(dd) 120 days,

Answer: two

a) what is the total amount outstanding in each case

Answer: over 30 Days R25,000.00 and over 120 Days R16,165.00

Total outstanding; R41,165.00

b) by what date is it envisaged that the outstanding amounts will be settled?

Answer: Invoices under query with the service providers, envisaged to be resolved and paid within the next 30 days.

LAND AND AGRICULTURAL DEVELOPMENT BANK OF SOUTH AFRICA

As at end 31 January 2022 Land Bank had 123 invoices owed to 85 vendors. All invoices were settled in February 2022.

As at 16 February 2022 the following remains outstanding and is envisaged to be paid by 28 February 2022.

aa) 30 days – 3 Invoices owed to 3 vendors amounting to R332 372.64

bb) 60 days – 1 invoice owed to 1 vendor amounting to R7 436.54

cc) 90 days – no invoices outstanding

dd) 120 days – 1 invoice outstanding owed to 1 vendor for the amount of R304 200.00

GOVERNMENT PENSIONS ADMINISTRATION AGENCY (GPAA)

The Government Pensions Administration Agency (GPAA) has a 99% rate on paying invoices on or before 30 days, see the below response:

1. 30 days, No outstanding supplier’s invoices on this period.

2. 60 days, No outstanding supplier’s invoices on this period.

3. 90 days, Two unpaid invoices valued at R206 634.00

One matter valued at R203 034.00 are subject to a dispute. The supplier did not complete the building renovations and payment is subject to the resolution of the dispute.

The other, an amount of R3 600.00 was retuned by the bank due to incorrect banking details. The service provider has been engaged to provide the correct banking details and should be resolved shortly.

DEVELOPMENT BANK OF SOUTHERN AFRICA (DBSA)

(a)& (b)

c) the amounts outstanding will be settled within the next 30 days.

SASRIA SOC LTD

The table below depicts the number of supplier invoices currently remain unpaid by Sasria, the total amount outstanding and the envisaged settlement date:

CO-OPERATIVE BANKS DEVELOPMENT AGENCY (CBDA)

The CBDA does not have invoices that have not been paid for more than 30 days. A monitoring tool is implemented to track the invoices received as well as ensure that any query or dispute is resolved within 30 days of receipt.

PUBLIC INVESTMENT CORPORATION

There are no supplier invoices outstanding for more than 30 days.

The rest of the questions fall away.

SOUTH AFRICAN REVENUE SERVICE (SARS)

South African Revenue Service – Outstanding payments

	(aa) more than 30 days	(bb) more 60 days	(cc & dd) more than 90 days)
(a) Number of invoices	44	32	62
(b) Total amount outstanding	R1,682,119.93	R 2,987,788.79	R 4,183,355.50

(c) By what date is it envisaged that the outstanding amounts will be settled

The population outstanding invoices relates to 16 creditors that is currently under investigation to determine reason for non-payment and will be resolved by 28 February 2022 through either payment or requesting credit notes from service providers/suppliers if not valid goods or services. Internal communications have been issued to remind all SARS employees of timeous payment of invoices in April 2021 as per Treasury Regulations and related instruction notes and a follow up internal communication in terms of attracting interest on late account and the related consequences in terms of the Fruitless and wasteful expenditure framework was issued on 11 February 2022 reminding employees of the importance to pay service providers/suppliers on time.

FINANCIAL INTELLIGENCE CENTRE (FIC)

OFFICE OF THE PENSION FUNDS ADJUDICATOR (OPFA)

As at 17 February 2022, the OPFA has no unpaid invoices older than 30 days.

Reply:

The National Treasury does not have any record of receipt of the correspondence dated June 2020.

a) No record of receipt of this document.

b) No record of receipt of this document.

c) National Treasury continue to apply the prescripts defined in the Public Service Act and Regulations related to employment.

Reply:

1. National Treasury is not drafting a policy on a family poverty grant.

2. There will be no pilot as National Treasury is not drafting the policy.

3. Refer to (2).

Reply:

A detailed breakdown of all public funds spent on travel and travel-related expenses for the past three financial years is attached in Excel format. The breakdown includes data from National and Provincial government departments only. National Treasury is still in the process of centrally obtaining, importing and analysing procurement relating data from the local sphere of government.

The breakdown provides the following dimensions:

(a) Spend per department per financial year;

(b) Spend per department per posting level item;

(c) Spend per department broken down in supplier turnover categories.

Reply:

The 2020/21 provincial conditional grant roll over process was concluded and provinces were notified of the outcome at the beginning of June 2021. All approvals granted were based on pre-audited spending as of 31 March 2021. In terms of the ECD Stimulus Relief Funds of the budget of R496 million, provinces underspent by around R392 million. Eight provinces, except for Western Cape who had fully spent their allocation, subsequently applied for the unspent funds to be rolled over to the 2021/22 financial year. After assessing all applications, taking into consideration commitments provinces had incurred; relevant legislation; and Treasury Regulations, approval was granted for R351 million to be rolled over.

This was communicated to Provincial Treasuries, who in turn notified provincial departments on 7 June 2021, Limpopo was notified on 21 June 2021.

Reply:

R1.5 billion has been allocated to provincial Departments of Health in 2021/22 through a ring fenced conditional grant component to fund the administration of vaccines, including weekend work. As of 22 August, only 19.8% (R297.2 million) of this amount had been spent.

National Treasury has not received any request from the National Department of Health (NDOH) indicating additional funding is needed in provinces for weekend vaccinations or otherwise. While some provinces have informally indicated that additional funding might be required, the National Treasury has requested the sector to provide a formal budget bid but has not received anything to date.

In principle, we support opening up for vaccinations in public sites on weekends, should the health sector decide to do so. However, it is not immediately clear to us that finance is the binding constraint to weekend vaccinations.

Reply:

1. (a) National Treasury Instruction Note No 34 issued in 2011 requires departments to submit 30 days exception reports to relevant treasuries each month with information related to (i) the number and value of invoices paid after 30 days from the date of receiving invoices, (ii) the number and value of invoices that are older than 30 days, which remained unpaid, and (iii) the reasons for the late and/or non-payment of the invoices.The amount of R4,1 billion represent the total amount of all invoices paid after 30 days during the 2020/2021 financial year and this amount is inclusive of invoices paid to small, medium and micro enterprises (SMMEs). (b) Information on the breakdown of amounts paid to SMMEs can be obtained from relevant accounting officers of national departments.

2. The amount of R415 million represent the rand value of all invoices older than 30 days and not paid, this amount is inclusive of amounts owed to SMMEs as at the end of the 2020/2021 financial year. Information on the total outstanding amount to SMMEs can be obtained from relevant accounting officers of national departments. (b) Information on the breakdown of outstanding amounts to SMMEs can be obtained from individual departments.

3. The amount of R25,9 billion is the total amount of all invoices paid after 30 days by provincial departments during the 2020/2021 financial year including invoices from SMMEs. Information on the total amount paid after 30 days to SMMEs can be obtained from departments. (b) Information on the breakdown of amounts paid to SMMEs can be obtained from individual departments in provinces.

4. (a) The amount of R5,3 billion represent the rand value of all invoices older than 30 days and not paid by provincial departments including invoices from SMMEs as at the end of 2020/2021 financial year. (b) Information on the breakdown of invoices not paid and total outstanding amount to SMMEs can be obtained from the relevant accounting officers of provincial departments.

5. Table 11 as contained in the annual report provides the status of performance of provinces regarding the number and rand value of invoices older than 30 days and not paid as at the end of February 2021 which did not include the results/progress as at 31 March 2021. Table 11 has since been amended with the aim of aligning it to information depicted in Graph 10 as indicated in table and graph below.

Graph 10 of the 2020/2021 report provides month-to-month comparative figures of the rand value of invoices older than 30 days and not paid during the 2020/2021 financial year when compared with the 2019/2020 financial year.

Table 11 of the 2020/2021 report provides information related to the performance of provinces regarding the number and rand value of invoices older than 30 days and not paid as at the end of 2020/2021 financial year.

Performance of provinces regarding the Number and Rand Value of invoices older than 30 days not paid
Province	Number of invoices	Rand Value of invoices	%
Northern Cape	10	95 124	0%
Western Cape	95	84 763 955	0%
Limpopo	175	19 002 927	0%
Kwazulu-Natal	915	451 527 061	2%
Free State	1 010	81 356 354	3%
Gauteng	2 650	313 956 082	7%
Mpumalanga	2 738	399 224 299	7%
North West	5 691	446 883 143	15%
Eastern Cape	24 222	3 522 284 900	65%
Total	37 506	5 319 093 844	100%

Reply:

The export tax on scrap metal was introduced into the Customs and Excise Act of 1964 with the intention of replacing the price preference system (PPS) for scrap metals, as noted in the 2020 Budget Review and the 20 January 2021 Final Response Document on the 2020 Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill, 2020 Draft Taxation Laws Amendment Bill and 2020 Draft Tax Administration Laws Amendment Bill. The export tax on scrap metal became effective on 1 August 2021.

This export tax was initially pursued as a proposal after a recommendation from the International Trade Administration Commission (ITAC), and was proposed by the Department of Trade, Industry and Competition (DTIC), after which it was followed by consultations with scrap metal suppliers and scrap metal users before the Bill was passed by Parliament. Following the extension of the PPS for two years, National Treasury is engaging with the DTIC on the role and impact of the export tax on scrap metal while the PPS is in place. Further consultations will also take place with other stakeholders, like the scrap metal suppliers and scrap metal users.

Reply:

Kindly refer to the response that was provided by the National Treasury to Question number: 1680 [NWW1888E].

Reply:

The 2021 Budget proposed to contain the growth in the public sector wage bill to protect an already vulnerable fiscus. The compensation of employees’ budget ceilings for the 2021 MTEF, which includes the 2022/23 financial year, assumes no pensionable salary increases however, it does provide for pay progression of 1.5 per cent annually for all public servants over the 2021 MTEF.

The impact of the 2021 Wage Agreement signed on the 27 July 2021, is currently being considered as part of the preparations for the 2021 Medium Term Budget Policy Statement (MTBPS) and the development of the 2022 MTEF. Further information will be provided at the time of the tabling of the 2021 MTBPS.

Reply:

I will attempt to answer this question, even as I request the Honourable Member to clarify the question he is asking. There are a number of unverified factual statements contained in the lead-up to the question, which seem to have limited relevance to the question itself.

Firstly, it is not clear on what basis the Honourable Member makes the claim that SARS and the NPA are issuing summonses to taxpayers with outstanding tax returns as part of a compliance drive which aligns with the proposed expatriate exit tax. What summonses is the Honourable Member referring to and by whom, from SARS or the NPA? SARS does not disclose any secret or protected taxpayer information matters to the Minister of Finance, in keeping with the provisions of the Tax Administration Act. I would therefore request the Honourable Member to provide more information on what facts he is basing this claim - we all need to take great care not to spread false information and rumours in the world we live in. The NPA also does not report to the Minister of Finance, and I cannot answer for the NPA, but here too the Honourable Member needs to provide more clarity on what basis he is suggesting that the NPA is involved in issuing taxpayer summonses.

With regard to a proposed “expatriate exit tax”, can the Honourable Member indicate what specific tax he is referring to, or which announcement in the last or previous Budget Review was such an announcement made? Perhaps he is referring to recent amendments – some already enacted in our tax laws and some proposed this year and not enacted as yet - that affect South African taxpayers who change their tax residency at some point in their lives, which addresses a number of long-standing inequities in our residency-based tax system. In the past, tax administration of foreign incomes and movement of taxpayers was hampered by a lack of jurisdictional assistance and poor information beyond the jurisdiction of any tax authority. The international sharing of information between tax authorities is enabling revenue collection options that were long difficult to pursue, even in cases where South Africa may have had taxing rights in principle. Our recent amendments, that some colloquially (and inaccurately) refer to as an “expat tax” or “exit tax”, remove exemptions that have benefited South African tax residents who spend a portion of their time in employment out of the country. This means that any increases in the tax liabilities faced by those taxpayers arise from the cessation of generous exemptions, rather than the imposition of new taxes.

With regard to any concern that the “amassed revenue is not lost through embezzlement, rampant corruption and mismanagement”, the Honourable Member is reminded that section 213 of the Constitution requires that all revenue collected from a national tax or levy must be paid into the National Revenue Fund (NRF), except money reasonably excluded in terms of an Act of Parliament. Further, money can only be withdrawn from the NRF via an appropriation or direct charge in terms of an Act of Parliament. The NRF is also annually subject to an audit, and its financial statements tabled in Parliament every year. The Treasury is able to assure the country that the flow of revenue from SARS after it has received the revenue due from taxpayers to the NRF is safe and there is little risk of losses through corruption and embezzlement – the biggest scope and risk of corruption occurs once funds are allocated from the NRF to organs of state in terms of the Budget, when it is up to the accounting officer or accounting authority to manage the spending of budgeted funds, including their procurement processes, in terms of the Public Finance Management Act or Municipal Finance Management Act. It is in this spending and procurement phase that we need to improve all our mechanisms to keep funds safe and ensure that all spending is in line with budgeted objectives and that the state gets full value-for-money.

 

Reply:

NATIONAL TREASURY

a) (i) (aa) Nil

(bb) One

b) (i) R260 507,19

ASB

The Accounting Standards Board did not suspend any employees during the 2020/21 financial year. No employees have been suspended to date. No reporting to the National Treasury was necessary.

CBDA

The Co-operative Banks Development Agency has no employees on level 11 salary scale and above suspended with full pay (aa) in the 2020-21 financial year and (bb) during the period 1 April 2021 up to the latest specified date for which information is available and (b) no amount of money was paid.

DBSA

a) (aa) None during FY2020/1

(bb) One employee suspended in FY2021/22 on the 28 July 2021 – currently still on suspension for a cumulative period of two (2) months.

b) (ii) The cumulative total amount – for the employee suspended from 28 July 2021 is R280k (gross) for the two months.

FAIS OMBUD

No employee was suspended in the 2020/21 financial year for the Office of the Ombud for Financial Services Providers.

FIC

(a)(ii) No employees of the Financial Intelligence Centre (FIC) were suspended during (aa) the 2020-21 financial year and (bb) during the period 1 April 2021 to date.

(b)(ii) Not applicable.

FSCA

The FSCA had no employee suspended with full pay for the period under review.

GEPF

There are no employees in the Government Employees Pension Fund that have been suspended during the 2020/21 financial year as well as the period from 1 April 2021 to date.

GPAA

The Government Pensions Administration Agency has no staff members in the category specified in the above question on suspension.

GTAC

a) Government Technical Advisory Centre – GTAC.

(aa) No employees of GTAC who are on level 11 salary scale and above have been suspended in the 2020-21 financial year.

(bb) No employees of GTAC who are on level 11 salary scale and above have been suspended in the 2021-22 financial year up to 28 September 2021.

b) (ii) Based on the answer provided above no money was paid out.

IRBA

(aa) The Independent Regulatory Board for Auditors (IRBA) has not suspended staff with pay at any level for the 2020/2021 financial year.

(bb) The IRBA has not suspended staff with pay at any level, for the period 1 April 2021 to 31 August 2021.

LAND BANK

The Land and Agricultural Development Bank of South Africa had one employee at Senior Management level (Peromnes level 4) that was placed on precautionary leave for the period 1 April 2020 to 31 March 2021 of which the full pay amounted to R1 938 336.10.

The Land and Agricultural Development Bank of South Africa had no employees on suspension for the period 1 April 2021 to date.

PFA

The Office of the Pension Funds Adjudicator has no employees suspended for the period mentioned.

PIC

The PIC makes use of Patterson Grades with regards to remuneration and not the levels of the Public Service as referred to in the question. However, following below are the details regarding employees on suspension during the periods specified:

Financial Year	Employees suspended	Total amount paid
2020 – 2021	3 employees	R 14,350,271

1 April 2021 to 31 August 2021

*3 employees

R 5,979,279.60

*One employee who was suspended in 2020 resigned in June 2021 following a disciplinary process in which there were no adverse findings against him.

SARS

The South African Revenue Service (SARS) was established in terms of the SARS Act, no 34 of 1997, as an organ of state within the public administration, but as an entity outside of the public service. Consequently, the salary scales of SARS does not align to the public service.

SASRIA

(aa) Sasria Soc Ltd had 3 employees suspended with full pay for the period 1 April 2020 to 31 March 2021.

(bb) Sasria Soc Ltd had 0 employees suspended with full pay for the period 1 April 2021 to 31 August 2021.

(b) (ii) R 758,656.87 was paid in 2020-21

TAX OMBUD

1. The Office of the Tax Ombud (OTO) has no employees suspended with full pay (aa) in the 2020-21 financial year and (bb) during the period 1 April 2021 up to the latest specified date for which information is available.

Reply:

a) The liquidation proceedings have been stayed and are pending before the Western Cape High Court, Cape Town.

b) In the course of the liquidation proceedings, certain factual allegations emerged that caused a factual dispute which could not be resolved on paper or affidavit in the application. This necessitated that the liquidation application be held in abeyance pending action proceedings, which were instituted for purposes of resolving the factual dispute.

Reply:

Our tax legislation, in particular the paragraph 2 of the Fourth Schedule to the Income Tax Act, No 58 0f 1962 (the Act), obliges the employer to withhold or deduct an amount known as Pay As You Earn (PAYE) from the remuneration payable to the employee and pay such an amount over to SARS.

An employer is also obliged to provide an employee with an annual tax certificate (generally known as IRP 5 certificate) which provides a summary of all remuneration and all deductions made during the period.

Therefore, an employee has the right to obtain a tax certificate (IRP 5) from the employer regardless of the employer’s compliance obligations with SARS.

Any omission by any taxpayer to pay over the PAYE to SARS does not infringe on the rights of the employees to receive a tax credit based on the non-compliance by the employer. All employees will be entitled to the full tax credit. SARS has an obligation to ensure that the employer compliance with its obligations as indicated above.

Chapter 6 of the Tax Administration Act No. 28 of 2011 (the TA Act) prohibits the South African Revenue Service (SARS) from disclosing taxpayer information to any person unless specifically provided for in the TA Act, in limited circumstances.

As there is no specific provision allowing SARS to release such information, SARS is unable to provide the specific requested information.

Reply:

1. Section 256 of the Tax Administration Act, 28 of 2011 (the Act) provides for circumstances under which a Tax Compliance Status (TCS) of the taxpayer can be issued or declined. A TCS is issued where:

a) A taxpayer is registered for tax where required to do so;

b) A taxpayer has debt owed to SARS where but has made arrangements to pay in instalments or such debt has been suspended by SARS; and

c) All returns that needed to be submitted to SARS have been submitted or arrangements have been made with SARS to submit such a return(s) after due date.

The absence of a TCS does not preclude a taxpayer from carrying on his or her business or from continuing to operate. If a taxpayer did not comply with the required tax obligations, SARS has legal instruments at its disposal to ensure that such taxpayer is forced to comply. These instruments do not include stopping the operations of the business.

Section 234 of the Act provides that a taxpayer who willfully fails to comply with his or her tax obligations is guilty of an offence only after been convicted by a court. At this stage, there is no such conviction. Therefore SARS is precluded from divulging any information of the taxpayer because it will be in contravention of section 69 of the Act.

2. As indicated above, any information which has been provided to SARS, including information relating to TCS, is subject to confidentiality in terms of section 69 of the Act.

SIGNATURE PAGE

NATIONAL ASSEMBLY

QUESTION FOR WRITTEN REPLY

QUESTION NUMBER: 2238 [NW2542E]

Deadline: 17 September 2021

Recommended / Not recommended

NAME: EDWARD KIESWETTER

COMMISSIONER: SOUTH AFRICAN REVENUE SERVICES

DATE: 16 SEPTEMBER 2021

Recommended / Not recommended

DR. DAVID MASONDO

DEPUTY MINISTER OF FINANCE

DATE:

Approved / Not approved

ENOCH GODONGWANA

MINISTER OF FINANCE

DATE:

Reply:

1. (a)(b) It is expected that any entity ensure that they are registered for all relevant taxes as required in terms of section 22 of the Tax Administration Act, 28 of 2011 (the Act).

Any entity have a duty to fulfill all its tax obligations as required in term of the Act, and equally, all entities enjoy the rights conferred to any other taxpayer in terms of the Act.

Chapter 6 of the Act prohibits SARS from divulging taxpayer information unless such information is provided to certain entities listed under section 70 and 71 of the Act.

(2) 3) As indicated above, all taxpayer information is subject to confidentiality in terms of Chapter 6 of the Tax Administration Act, 28 of 2011.

Reply:

Chapter 6 of the Tax Administration Act No. 28 of 2011 (the TA Act) prohibits the South African Revenue Service (SARS) from disclosing taxpayer information to any person unless specifically provided for in the TA Act, in limited circumstances.

As there is no specific provision allowing SARS to release such information, SARS is unable to provide the requested information.

It is important to note that SARS does use the legislative tools provided in the TA Act to collect tax debt without fear, favour or prejudice.

Reply:

a) National Treasury after being informed by the Pension Fund concerned, wrote to the municipality early in October 2020 to request the municipality to pay the outstanding debt and also to warn the Municipal Manager that it is a criminal offence not to pay over the pension contributions deducted from the employees to the Pension Fund.

b) (i) The municipal manager responded in late October 2020 acknowledging the debt and committed to settle all the outstanding amounts.

(ii) National Treasury is aware that by 15 December 2020, the municipality did not follow through on its commitment to settle all the outstanding amounts, but has since made a number of payments since January 2021, including current and outstanding debt. To date as at 08 September 2021, the total outstanding pension debt is at R16.4 million, which is a reduction by 50 per cent since January 2021.

As the Pension Funds Act currently stands, the Dr Beyers Naude Municipality is required to pay over pension contributions, in terms of the rules of the fund, deducted from member’s remuneration within 7 days of the end of the month in terms of section13A(1) read with 13A(3) of the Pension Funds Act, 24 of 1956 (“the Act”).  Further, in terms of section 13A(7) interest is payable on the late payment of contributions, which starts running from the 1st day of the end of the month in terms of Regulation 33(7).  Regulation 33(4) further requires the monitoring person, usually the Principal Officer, to bring the non-compliance to the attention of the affected members and advise the FSCA of the action taken.  If the non-compliance persists after 90 days, the Principal Officer must report the matter to the SAPS.  Should the Board of the Fund not take the requisite action against the employer, it may face regulatory action.

c) National Treasury does not have the power to take direct measures against a municipality that has not paid, as such power resides firstly with the provincial government. National Treasury can only act in terms of section 139 of the Constitution if the province has failed to exercise its oversight over the municipality.

d) The powers of the National Treasury are very limited in following up on non-payment by municipalities, and can only intervene via a province in terms of section 139 of the Constitution. National Treasury is working on amending the PFMA and MFMA to put in place a stronger framework to deal with non-payments on tax, pension contributions, as well as to suppliers like Eskom and Water Boards.

National Treasury does the have the power to stop the transfer of the equitable share funds to a municipality in terms of Section 216(2) of the Constitution and other applicable legislation in the event of persistent failure by a municipality to honour its financial commitments. National Treasury does require municipalities to report on the non-payment of its commitments to SARS, pension and other staff benefits deducted from municipal officials to be paid over to the appropriate Funds and / or institutions. Failure for municipalities to provide this evidence may result in their equitable share being withheld in an effort to enforce compliance.

Until further legislative changes are made to the MFMA, the power of the National Treasury to directly intervene in a municipality is very limited, and often restricted to a form of moral suasion and naming and shaming, or if it is suspected that there is a case of criminal actions, to refer such matter to the police for further action.

Reply:

1. As Minister of Finance, I generally only make tax announcements on Budget Day, but given the exceptional circumstances after the first Covid-19 lockdown, I made some tax announcements on 29 March and 23 April 2020 to provide tax relief to businesses and individuals during the 2021/21 financial year. Two of these measures applied to corporations, namely delaying the base-broadening measures I had announced in the previous Budget and deferrals for provisional tax payments. These measures have now run their course. The corporate tax regime already contains automatic stabilisers as a tax on profits, and as companies’ profitability recovers so will revenue from corporate income tax. Companies that face financial distress can utilise the existing tax administrative measures to apply for hardship relief. To aid the medium-term recovery, I announced in the 2021 Budget speech the overall intention to restructure the corporate income tax system in a revenue neutral manner, through a combination of a tax rate reduction and base broadening measures. These measures are expected to enhance efficiency, transparency and fairness in the corporate tax system. The design of the corporate income tax system can influence taxpayer behaviour, which impacts the economy. A corporate income tax regime characterised by a broad base (fewer tax incentives and exemptions) and a lower rate is simpler with less loopholes and requires less onerous anti-avoidance legislation. By revising the corporate tax base in this manner, we can afford my proposed one percentage point reduction in the corporate income tax rate from 28 per cent to 27 per cent from April 2022 without a loss of revenue. 27 per cent is still higher than the current global average of around 23 per cent, but South Africa is working with more than 100 other countries on a multilateral solution for a global minimum tax rate of at least 15 per cent. A lower corporate tax rate is expected to make our tax system more attractive to investments: this can boost the post COVID-19 recovery; reduce the incentive for multinational firms to shift their profits to low-tax countries; and reaffirm our commitment to support business in working towards inclusive growth. The announced reduction from 28 to 27 per cent will be done in a revenue neutral manner by broadening the base through reducing the number of tax incentives and implementing the measures that were delayed last year, namely restricting the use of excessive interest deductions and limiting the setoff of accumulated assessed losses against taxable income. The combination of a rate reduction and base broadening measures aims to ensure affordability so that no social spending is affected as a result of these proposals.

2. No, as the tax system is a very blunt tool to achieve non-revenue related objectives, and introducing additional further tax incentives will also work against our objective to broaden our tax base and lower the tax rate for all businesses, and to do so in a revenue neutral manner. Tax incentives narrow the tax base, requiring a higher tax rate to raise a given level of revenue. The provision of tax incentives often undermines the principles of a good tax system, which should be simple, efficient, equitable and easy to administer. Tax incentives provide certain taxpayers/industries with preferential treatment compared to what is generally available to all, creating opportunities for vested interests and lobby groups. The 2021 Budget Review stated that “Government is reducing the number of tax incentives, expenditure deductions and assessed loss offsets…”. National Treasury has already commenced a process to review existing corporate tax incentives with a view to repeal those that are redundant and include sunset dates where there are none. Studies conducted by international organizations, such as the International Monetary Fund (IMF), the Organization for Economic Cooperation and Development (OECD) and the World Bank confirm that investors also value other factors above tax incentives when making investment decisions. These include political and policy certainty, infrastructure, access to markets, access to skilled labour, etc. Reducing the corporate income tax rate and broadening the base is a better means of benefiting all businesses. In turn, employees and consumers can also benefit from higher wages and lower prices.

Reply:

1. The Honourable Member’s question covers a number of different entities and forums operating in the financial sector regulatory system and established in terms of the Financial Sector Regulation Act 9 of 2017, which took effect on 1 April 2018. It is difficult to provide all the detail requested, as the regulators and the ombuds often deal with market-sensitive and confidential information, and may not have the power to even report such information to the Minister. This has also resulted in the delay in answering this question. Many of the entities are not fully-fledged entities listed as entities in terms of the PFMA, and are more like working committees or oversight committees/forums, and their membership is determined in terms of specific official positions rather than particular individuals. Some of the members of the various committees are determined by the positions held by members, be they the Governor, Deputy Governor of the SARB, or the Director-General or Minister of a specific department. However, all these committees or forums are built around the two core regulatory institutions established under the Financial Sector Regulation Act No. 9 of 2017, which are the Prudential Authority and the Financial Sector Conduct Authority, as well as the ombuds and tribunal system.

2. I am not in a position to answer the detailed information requested by the Honourable Member, which in any case is provided via the statutory reports required from the entities in terms of the PFMA and other laws, like the annual reports which are all tabled in Parliament every year. Hence, I will restrict my responses to easily available information, like the name of the chair or deputy chair of such institutions, and not the entire staff of any entity. The Honourable Member is free to engage with each fully-fledged entity after they have submitted their annual and other reports to Parliament, when the relevant portfolio committee convenes a hearing to consider such reports. I will not answer more granular information like the number of meetings held by any committee or organization, as such detailed operational information is generally not part of the statutory reporting system.

3. The Honourable Member should also note that there has been a transitional period for implementing the FSRA, which has also taken longer than initially anticipated, particularly for the new positions and structures created, like the appointment of the Commissioner and the Deputy Commissioners of the FSCA, or the establishment of the Ombud Council. Some of the committees will only begin to function once the transition period is over, which I expect to be by October 2021.

Financial Sector Conduct Authority

4. I am happy to confirm that the first Commissioner of the FSCA has been appointed. I appointed Mr Unathi Kamlana as the Commissioner of the FSCA, starting on 1 June 2021. Ms Astrid Ludin was also appointed as a Deputy Commissioner of the FSCA, commencing on the same date. I have just received the second report from the Shortlisting Panel recommending two persons for the vacant Deputy Commissioner positions, and hope to make a final decision on such appointments by early July 2021. The appointment of a further Deputy Commissioner will enable the Minister of Finance to disband the Transitional Management Committee and mark the end of the transition process for the FSCA, and put it firmly under the new permanent leadership. In the meantime, from 1 June 2021 until it is phased out, the new Commissioner is the chair of the Transitional Management Committee in line with the provisions of section 66(4)(a) of the FSRA. More details on the FSCA are available in its annual reports, as tabled in 2020.

5. The FSCA Executive Committee is a committee of the FSCA, comprising the Commissioner and Deputy Commissioners of FSCA, established in terms of section 60 of the FSRA. During the transition, whilst there was no Commissioner and Deputy Commissioners appointed, the Transitional Management Committee (TMC) served, in terms of the Financial Sector Regulations, as the Executive Committee. Those who have acted as Chairs of the TMC include Mr Abel Sithole, Adv Dube Tshidi, Mr Olano Makhubela and Ms Katherine Gibson. I have been informed by the FSCA that the Executive Committee (i.e. the TMC) has generally been meeting at least twice monthly.

PRUDENTIAL AUTHORITY

6. With regard to the Prudential Authority (PA), it is an entity that resides within the SA Reserve Bank, and its CEO is one of the Deputy Governors of the SARB in terms of section 36(1) of the FSRA. Deputy Governor Kuben Naidoo has been its CEO from the date it was established on 1 April 2018. The Prudential Authority Oversight Committee, which oversees the PA, is established in terms of section 41 (2) of the FSR Act, and comprises of:

(i) Governor of the South African Reserve Bank, who is the Chairperson;

(ii) CEO of the Prudential Authority, who is one of the Deputy Governors; and

(iii) All the other Deputy Governors of the South African Reserve Bank

7. The current chair of the Prudential Committee is thus Mr Lesetja Kganyago (as the Governor of the SA Reserve Bank), and its other members are the other Deputy Governors (Dr Rashad Cassim, Ms Fundi Tshazibana and Mr Kuben Naidoo). The Prudential Committee informed me that it held its first meeting on 16 April 2018.

OMBUD COUNCIL AND OMBUD COUNCIL BOARD

8 The Ombud Council was established in terms of section 175 of the FSRA. This section took effect on 1 November 2020. In terms of section 179 of the FSRA, the Board of the Ombud Council is comprised of:

1. The Chief Ombud;
2. The Commissioner of the FSCA;
3. 4-6 members appointed by the Minister of Finance.

9. The Minister appointed the Chair and Deputy Chair and 4 other members to the Board for a three-year term, commencing on 1 November 2020, in terms of section 180 of the FSRA, as follows:

1. Ms Deanne Wood (Chair);
2. Ms Dikeledi Chabedi (Deputy Chairperson);
3. Mr Emmanuel Lekgau;
4. Ms Silindile Kubheka;
5. Mr Adam Horowitz; and
6. Ms Charmaine Soobramoney.

10. The Board could only be properly constituted once the Chief Ombud was appointed, which was done on 2 May 2021, when I appointed Ms Eileen Meyer as the Acting Chief Ombud for a term of one year, starting 2 May 2021, in terms of section 188(1) of the FSRA (refer to attached media statement dated 24 May 2021). The Ombud Council Board is thus properly constituted, and held its first meeting on 26 May 2021.

11. The Chief Ombud will establish and operationalise the Office of the Ombud Council. As such, the Ombud Council currently does not have an executive committee, and thus has not held any meetings.

 

FINANCIAL SERVICES TRIBUNAL

12. The Financial Services Tribunal was established in terms of section 219 of the FSRA. It commenced its operations on 1 April 2018. In terms of section 220(1) of the FSRA, the Financial Services Tribunal comprises as many members as the Minister determines. Currently, the Financial Services Tribunal has 20 members. The current Chairperson of the Tribunal is Justice Yvonne Mokgoro, and the current Deputy Chairperson of the Tribunal is Judge Louis Harmse.

13. Whenever there is a case, panels of the Tribunal (usually consisting of 3 members) convene to hear and adjudicate on the case.

14. The rest of the organisations/entities named by the Honourable Member are not self-standing entities regulated or listed in terms of the PFMA, but rather are merely committees or forums, designed to either co-ordinate activities between regulators and/or departments or to exercise oversight.

Structure	(a) Date formed	(b) Names of persons serving on each structure	(c) Dates of meetings of each body since January 2020	(d) Names of Chairperson and Deputy Chairperson
Financial Sector Inter-Ministerial Council	No meetings have been convened as yet, as Section 83 of the Financial Sector Regulation Act is not yet in operation. This structure will only be convened as and when deemed necessary by the Minister of Finance.	Sections 83 and 84 of the FSRA determines that the following Ministers will serve on this Council: (a) Minister of Finance (chair); (b) Minister of Trade and Industry (for consumer protection, consumer credit and economic development); and (c) Minister of Health.	N/A	Minister of Finance, Mr Tito Mboweni Deputy Chairperson - none
Financial System Council of Regulators	13 June 2019	This is an advisory body established in terms section 79 of the FSR Act, and its members are as follows: (i) Chair: Director-General – National Treasury; (ii) Director-General – Department of Trade, Industry and Competition; (iii) Director-General – Department of Health; (iv) CEO – Prudential Authority; (v) Commissioner – Financial Sector Conduct Authority; (vi) CEO – National Credit Regulator; (vii) Registrar and CEO – Council for Medical Schemes; (viii) Director – Financial Intelligence Centre; (ix) Commissioner – National Consumer Commission; (x) Commissioner – National Consumer Commission; (xi) Deputy Governor responsible for financial stability matters – South African Reserve Bank.	22 January 2020	Chairperson – Dondo Mogajane Deputy Chairperson – None
Financial Stability Oversight Committee	9 March 2018	In terms of section 22 (1) of the FSR Act, the Financial Stability Oversight Committee consists of the following members:   (i) Chair: Governor – South African Reserve Bank); (ii) Deputy Governor for Financial Stability matters – South African Reserve Bank); (iii) CEO – Prudential Authority; (iv) Commissioner – Financial Sector Conduct Authority; (v) CEO – National Credit Regulator; (vi) Director-General – National Treasury; (vii) Director – Financial Intelligence Centre; (viii) Head: National Payment System Department – South African Reserve Bank; (ix) Head: Financial Stability Department – South African Reserve Bank; and (x) Head: Financial Surveillance Department.	31 March 2020 and 04 September 2020	Chairperson – Lesetja Kganyago Deputy Chairperson – Rashad Cassim
Financial Sector Contingency Forum	Forum to assist the FSOC, and launched as a statutory forum on 1 April 2018 (as it was originally set up as an advisory structure in 2008, following the global financial crisis)	Section 25 of the FSR Act empowers the Governor of the SARB to establish this forum to assist the Financial Stability Oversight Committee (FSOC). It consists of the following members: (i) the 3 Deputy Governors of the South African Reserve Bank; (ii) a representative of the Financial Sector Conduct Authority; (iii) a representative of the Financial Intelligence Centre; (iv) a representative of the National Treasury; (v) a representative of the Banking Association South Africa; (vi) a representative of the South African Insurance Association; (vii) a representative of the Johannesburg Stock Exchange; (viii) a representative of the Payments Association of South Africa; (viii) a representative of Bankserv; (ix) a representative of Strate Ltd; (x) a representative of the Association for Savings and Investment South Africa; (xi) a representative of the National Disaster Management Centre; (xii) a representative of the South African Bank Risk Information Centre.	This forum meets twice a year	Chairperson – Rashad Cassim Deputy Chairperson – None

15. Where there is a Chair or Deputy Chair for any structure above, they are all appointed in terms of legislation, or by the Minister of Finance or Governor of the SA Reserve Bank, depending on the FSRA. No Chair or Deputy Chair is elected to such position.

16. As noted above, the only structure that has not been established as yet is the Financial Sector Inter-Ministerial Council, which will only be convened as and when deemed necessary, as it is an advisory structure. Further, section 83 has not taken effect as yet. More importantly, the underlying technical structure, the Financial System Council of Regulators, has been established, and has started meeting. Note that the aim of these two structures is to co-ordinate with related regulatory structures like the National Credit Regulator and the Council for Medical Schemes, which also regulate financial products, but report to different Ministers.

17. It should be noted that the agendas of many of these structures tend to be market-sensitive, and care needs to be taken not to make them public until appropriate steps are taken to present more comprehensive reports via public announcements by the regulators. Neither is the Minister involved with many of these structures. The regulators and entities will report to Parliament at least annually, and deal with the key issues, including on their performance.

 

Reply:

I am not aware of any registered bank in South Africa refusing to provide its services to clients on the basis of being black, or being black-owned. As the Honourable Member may be aware, the relationship between banks and their account holders is governed by the law of contract and hence confidential to any third party. The termination of any banking account is therefore not disclosed to the Minister of Finance or National Treasury, and we are not legally empowered to intervene in a bank-client relationship, as confirmed in case law, for e.g. in the 2017 Minister of Finance vs Oakbay Investments (Pty) Ltd and 2010 Bredenkamp and Others vs Standard Bank of SA. The only time National Treasury or I become aware of any specific closure of any bank account is when an affected customer contacts us (as was the case with Oakbay) or when it is reported in the media.

National Treasury does not have any evidence that implicates any bank in refusing to provide its services to any person or entity because of their race, gender or sexual orientation. Needless to say, any company or person discriminating on such a basis is breaking the laws of our country, and will have to face the Human Rights Commission, and also face criminal and regulatory sanctions in terms of the laws of our country. If the Honourable Member does have credible evidence on such discrimination by any bank, I invite him to provide such evidence to the Financial Sector Conduct Authority, the criminal prosecution authorities and Human Rights Commission. I do want to caution about certain individuals who make it their business to make such (and similar) allegations for personal financial gain, as they then market their services to “help” customers on their interest rates or charges etc – I would warn the public not to fall for such scams.

A bank may refuse to take on a customer, or terminate its services to a client, for many reasons, provided the reasons for such refusal or termination do not violate public policy or constitutional values. Such reasons also include the obligation on banks to reduce risks related to criminal or money laundering - banks face steep sanctions from both domestic and overseas regulators if they do not have effective customer due-diligence measures in place.

In order to ensure that banks do not abuse their power and treat their retail customers fairly at all stages, even when closing their accounts, the Financial Sector Conduct Authority (FSCA) has put in place conduct standards which came into effect on 3 July 2020 in terms of section 57 of the Financial Sector Regulation Act 9 of 2017. Section 9 of Conduct Standard 3 of 2020 (Banks) requires banks to provide reasons to an affected customer when a bank refuses, withdraws or closes any financial product or financial service to any customer, and also has to provide reasonable prior notice. Section 9 (4) of the standard, allows a bank to refuse, withdraw or close a financial product or financial service without providing prior notice or reasons if:

1. compelled to do so by the law;
2. it has reasonable suspicion that the financial product or service is being used for any illegal purpose; and
3. it has made the necessary reports to the appropriate authority.

Treasury is aware that there are also more structural forms of exclusion due to the history of our country, forms of inequality and access to financial services. For such reasons, National Treasury has adopted a multi-pronged approach to transformation that seeks to enhance market conduct, market development and financial inclusion (deepening financial inclusion for individuals and small businesses).

(a) Transformation in the financial sector (including the banking sector) is set out in terms of the BBBEE Act and more specifically, the Financial Sector Code. It is led by the Financial Sector Transformation Council, and governed by the Financial Sector Code that was issued in terms of section 9 (1) of the Broad-based Black Economic Empowerment (BBBEE) Act 53 of 2003.The Financial Sector Code commits all participants to actively promote a transformed, vibrant and globally competitive financial sector that reflects the demographics of South Africa, and which contributes to the establishment of an equitable society by providing accessible financial services to poor and marginalized people and by directing investment into targeted sectors of the economy. Working together with the Financial Sector Transformation Council and its other members, National Treasury will continue working on the strengthening and implementation of the Financial Sector Code so as to enhance the transformation of the financial sector.

National Treasury is also developing legislation that will further seek to enhance the transformation imperatives of the South African financial services sector, with the publication of drafts of the Conduct of Financial Institutions (COFI) Bill for public comment in December 2018 and a second draft in September 2020 as the first steps. The current version of the Bill contains provisions (if enacted) that require financial institutions to develop transformation plans to guide them in meeting their commitments in terms of promoting transformation of the financial sector as envisaged in the BBBEE Act and the Financial Sector Code.

(b) Economic inclusiveness is also embedded in the financial inclusion leg of the multi-pronged approach. Treasury recently published a draft policy document on financial inclusion, titled “An Inclusive Financial Sector for All” for public comment, which is available on the National Treasury website. The link is as follows:

http://www.treasury.gov.za/comm_media/press/2020/Financial%20Inclusion%20Policy%20-%20An%20Inclusive%20Financial%20Sector%20For%20All.pdf

 

Reply:

1. I am not aware that there was any letter from BASA dated 10 October 2020, and the attachment submitted by the Honorable Member appears to be a public media statement issued by BASA on 11 October 2020. The Minister of Finance cannot be expected to answer or account for any statement issued by BASA, or for the loan policies of any private registered bank.

I will, however, assist the Honorable Member by commenting and highlighting relevant points from this and other BASA statements, some of which they also sent to the National Treasury. I refer the Honourable Member to the BASA website (www.banking.org.za) for other relevant statements, and also bring to the attention of the Honorable Member my response to a previous parliamentary question PQ 869, published on 29 September 2020.

a) (i) Payment breaks on credit agreements

Yes, I am aware that all the major banks took steps to provide relief to their customers soon after the start of the first COVID-19 lockdown in 26 March 2020, based on the public statements issued by BASA and various individual banks, as well as meetings between BASA and Treasury. According to the BASA statement of 12 November 2020 (https://www.banking.org.za/news/nov-covid-19-relief-update/), most of the major banks restructured loans and credit facilities for their clients and corporate customers in financial distress through their own credit relief process, almost immediately at the start of the first lockdown. In this regard, the credit relief (repayment holiday or payment breaks on credit agreements) was a voluntary initiative by commercial banks, which was offered to individuals and small and medium enterprises (SME) for the six months (April – October 2020). As at 24 October 2020, BASA reports that banks had provided R33,61 billion in payment breaks on credit agreements to South African businesses and individuals who were in financial distress as a result of the Covid-19 pandemic and the national lockdown.

According to BASA, over 83 per cent of individuals and 95 per cent of businesses who requested help, with personal and home loans, vehicle finance, business mortgages and credit facilities, received the required assistance. This cash flow relief for 2 684 271 credit agreements for eligible individuals and 135 540 businesses was critical to the preservation of quality of life, jobs, businesses and the functioning of the economy.

a) (ii) Loan guarantee scheme

According to the last update on the loan guarantee scheme released by BASA as at 19 June 2021, a total 13 324 loan applications were approved for SMEs within the different turnover bands, with a total rand value of R18.39 billion. The majority of approved applications were submitted by SMEs with a turnover greater or equivalent to R1 million but less than R20 million. The relevant statement is available on the BASA website.

2. This information is not available to National Treasury, as it is bank-specific, and covers financial assistance beyond the loan guarantee scheme. But BASA has indicated (as stated above) that at least 83 per cent of individuals and 95 per cent of businesses that requested help, with personal and home loans, vehicle finance, business mortgages and credit facilities, received assistance. This implies that 17 per cent of individuals and 5 per cent of commercial enterprises, respectively, did not receive financial assistance as a result of their respective credit facilities not being up-to-date in terms of repayments credit agreements.

3. As at 19 June 2021, BASA reports that a total of 28 430 covid19 loan guarantee scheme applications were rejected. Applications were rejected since, inter-alia, they did not meet the eligibility criteria for the scheme, as set out by National Treasury and the South African Reserve Bank, or because they did not meet commercial bank’s risk criteria. In some cases, applications were rejected as a result of outstanding financial records or documentation not submitted; or the loan value requested was either too high, being in excess of the R100 million maximum loan amount requirement, or that the reason for the application was not a COVID-19 related matter/distress.

4. The National Treasury, together with the South African Revenue Service (SARS), the Prudential Authority and The Financial Sector Conduct Authority (FSCA), have taken a number of measures to assist all businesses, using tax and regulatory instruments. The tax measures were outlined in announcements made by the Minister of Finance (see Supplementary Budget Review, page 32), and outlined in parliamentary questions PQ 850, 851, 852, 853, 854 and 869 in 2020. Small businesses (with gross income of up to R100 million) were able to defer a portion of up to 35 per cent of their employees’ tax payments and a portion of up to 35 per cent of their provisional tax payments. Businesses of any size could claim the increased Employment Tax Incentive and were exempt from the Skills Development Levy for 4 months. Companies that still face financial distress can utilise the existing tax administrative measures to apply for hardship relief.

FSCA, in consultation with the National Treasury, also provided further support to businesses and individuals by adjusting regulations to support insurance premium relief for policyholders, allowing them to claim while minimising disruptions to the expected income of intermediaries. In addition, the FSCA advised the boards of trustees for retirement funds and financially distressed employers to consider allowing appropriate relief with regard to retirement contributions.

The National Treasury continues to monitor the impact of the COVID-19 pandemic on the economy and jobs, and recognises the challenges facing both small and large businesses, particularly those in the hardest hit sectors. Existing support measures by the South African Reserve Bank and FSCA, as detailed in the 2021 Budget Review (pages 173-174), will continue, subject to conditions and regulatory mandates. National Treasury, working with relevant stakeholders, continues to explore more appropriate support and risk-sharing mechanisms, including proposals related to non-bank financial institutions and development finance institutions, mindful of the fiscal challenges facing South Africa.

Reply:

a) The National Treasury is not proposing amendments to the Constitution.

b) The National Treasury is not proposing a balance budget rule but the 2021 Budget sets out a fiscal framework that targets a debt stabilising primary balance in 2024/25 with debt as a share of output stabilising in 2025/26. The spending ceiling announced in February 2021 remains a key fiscal anchor.

c) No, a debt rule is inappropriate because small changes to debt projection assumptions can have a very significant impact on the long-run debt outlook. Projections of debt are very sensitive to assumptions about future rates of economic growth, interest rates, exchange rates and the long-term path of the deficit. Unexpected increases in inflation or depreciation of the exchange rate would increase the cost of outstanding inflation-linked or foreign-currency bonds. A debt rule would encourage pro-cyclical fiscal policy stances which would worsen the conduct of fiscal policy.

d) Government already has an expenditure ceiling. It sets a maximum level of expenditure to which the government has committed itself. The ceiling is applied to national government departments and excludes spending that is financed from dedicated revenue sources other than the National Revenue Fund. The ceiling has helped to significantly slow the growth of non-interest expenditure.

e) No, government’s tax policy objectives are set out in chapter 4 of the 2021 Budget review. Tax rates are influenced by projections of government spending and borrowing and the nation’s debt stock and a single numerical revenue rule would be inappropriate. Within this framework, tax policy must also consider the effect of taxes on economic growth; the behavioural response of taxpayers; inequality and fairness; and revenue administration capacity. Short‐term tax policy changes factor in the state of the economy. Over the medium term, tax policy changes seek to create an environment that is conducive to broad‐based economic growth and that avoids complicated incentives for specific sectors or groups of taxpayers. Progressivity will be enhanced by restricting deductions for the wealthy and increasing overall collections through improved administration.

Reply:

Yes. The funding for the local government elections has been provided for and is included in the baseline of the Electoral Commission. The procurement of the election devices is also funded and included in the baseline. The baseline for the IEC for 2021/22, including the operational expenditure of the Commission, is R2.2 billion.

Reply:

1. The June 2020 Supplementary Budget projected that gross national government debt will reach R3.97 trillion or 81.8 per cent of GDP by the end of 2020/21. According to the preliminary outcome for 2020/21, gross debt amounted to R3.93 trillion or 79 per cent of GDP. According to the 2021 Budget, gross debt will stabilise in 2025/26 at 88.9 per cent of GDP compared to 95.3 per cent forecasted in the 2020 Medium Term Budget Policy Statement.

2. (a) The 2020 Supplementary Budget outlined how Cabinet had endorsed a 2021 budget process that moves towards debt stablilisation. Cabinet had reiterated support for the proposed public-service wage bill reductions announced in February, which would improve the composition of spending.

The 2020 Medium Term Budget Policy Statement (MTBPS) then proposed steps to reduce the fiscal deficit and stabilise debt-to-GDP ratio over a five-year period. The 2020 MTBPS proposed fiscal adjustments to narrow the main budget deficit by 7.3 percentage points of GDP over the 2020 medium-term expenditure framework (MTEF) period, and by an additional 1.8 percentage points in the subsequent two years after the MTEF. To partially offset the effect of the spending adjustment, government had weighted the largest share of reductions to the wage bill, while supporting capital grants and the Infrastructure Fund. Narrowing the deficit and improving the composition of spending requires reductions in the growth of the wage bill, which accounts for about one-third of the consolidated budget. Government proposed downward adjustments to main budget spending plans over the next three years. Relative to the 2020 Budget, total main budget non-interest expenditure was projected to decrease by R62.9 billion in 2021/22, R92.9 billion in 2022/23 and R150.9 billion in 2023/24.

(c) The 2021 Budget continues this path of expenditure restraint and fiscal consolidation. However, it withdraws the R40 billion in tax measures announced in 2020 SAB. Efforts to narrow the budget deficit and improve the composition of spending – primarily through restraining wage bill growth – remain on course.

Reply:

The concerns raised by the Accounting Standards Board (ASB) in their latest Annual Performance Plan has been noted by the Ministry and the National Treasury. The process for the promulgation of Standards of GRAP approved by the ASB, including the consultation with key stakeholders, has been reviewed and streamlined to avoid any future backlogs.

With regard to GRAP 104 on Financial Instruments, the effective date of this revised standard will be 1 April 2025.

Reply:

1. I presume the Honourable Member is referring to the Health Promotion Levy (HPL) on sugary beverages that was introduced on 1 April 2018, to give effect to health policy to counter the rise in diabetes, obesity and other related diseases in South Africa. There is no “sugar sweetened drings tax” nor any “sugar tax”.

The HPL is administered and collected by SARS. The HPL is a domestic consumption tax and payable by manufacturers in the Republic. Imported sugary beverages are taxed when cleared for domestic consumption.

The cumulative revenue collected from the on domestically produced and imported products, from inception on 01 April 2018 to 31 March 2021, is R7.9 billion. Collections in 2018/19, 2019/20 and 2020/21 were R3.2 billion, R2.5 billion and R2.1 billion respectively. These revenue figures from both domestically produced and imported sugary beverages are published on the National Treasury website at http://www.treasury.gov.za/comm_media/press/monthly/monthly_2021.aspx.

2. Tax revenues from the HPL are not earmarked or ringfenced for any particular expenditures, but instead flow into the National Revenue Fund. However, additional funding for health promotion and chronic disease prevention was allocated in the National Department of Health budget (see 2018 Estimates of National Expenditure). This allocation is approximately R50 million per annum over the 2021 MTEF. The National Department of Health has spent R24 million in 2019/20 and R14 million spent in 2020/21 on the health promotion allocation.

3. The rate for the HPL was not changed for the 2021/22 fiscal year and no announcement has been made for the 2022/23 fiscal year. Rate and levy changes are normally only made as part of the annual Budget announcements.

In terms of revenue estimates, the 2021 Budget Review showed an expected growth of HPL collections from R2.0 billion to R2.2 billion for the 2021/11 fiscal year. Measured against the actual unaudited revenue outcomes for 2020/21, the estimates for 2021/22 were forecast to increase by R101.4 million (4.8%), with most of the growth emanating from the HPL on domestically produced products. In the next year, HPL collections were estimated to increase from R2.2 billion to R2.4 billion in 2022/23, representing a growth of R152.1 million (6.9%).

4. During the 2020/21 financial year, HPL collections from locally manufactured sugary drinks, which are the vast majority, contracted year-on-year by 16.4% when compared to the 2019/20 financial year. During the early stages of the hard lockdown levels, most manufacturers of sugary drinks were not classified as essential services and thus production was affected. Furthermore, it appears that the impact of the restricted sales on alcoholic products during the COVID- lockdown is one of the drivers behind the lower manufacturing of sugary drinks as demand has also fallen.

During the 2018/19 financial year the imports of HPL amounted to R1.34 billion with R53.1 million in duties collected, and imports increased to R1.45 billion with duties registering R67.8 million. In 2019/20 imports amounted to R1.23 billion with duties of R66.6 million.

The imports of HPL improved to R556.7 million and duties of R26.2 million in 2020 during the first five months of the strict lockdown, as compared to R444.4 million and R24.70 million of duties during the same period in 2019. Overall, Covid-19 had an insignificant impact on HPL collections from imports.

(5) At present there have been two studies that have been shared with the Ministry of Finance on the effectiveness of the health promotion levy. The first detailed the impact of the health promotion levy on the prices of beverages and did not find any evidence of price increases for beverages that were exempt from the health promotion levy, whiles those beverages that were taxed increased in price by around R1 per litre on average. The second study examined the impact of the health promotion levy on the consumption levels of sugary beverages. The study finds that there was a decrease in the consumption of taxable beverages, with a smaller increase in the consumption of non-taxed beverages, and that the impact was greater for lower income households. The citations of the two studies are provided below:

• Stacey, N., Mudara, C., Ng, S. W., van Walbeek, C., Hofman, K., & Edoka, I. (2019). Sugar-based beverage taxes and beverage prices: Evidence from South Africa's Health Promotion Levy. Social Science & Medicine, 238, 112465.
• Stacey, N., Edoka, I., Hofman, K., Swart, E. C., Popkin, B., & Ng, S. W. (2021). Changes in beverage purchases following the announcement and implementation of South Africa's Health Promotion Levy: an observational study. The Lancet Planetary Health, 5(4), e200-e208.

Reply:

Yes. The draft 2021 “List of Qualifying Physical Impairment or Disability Expenditure” (draft 2021 Disability List) was prepared by SARS following proposals made by a stakeholder who represents a special needs school for learners with disabilities and, in addition, represents an association of independent schools. These independent schools provide general education together with interventions required as per the disability of each learner.

The guiding principle for qualifying expenses has always been to determine what additional expenses the person with a disability would incur, without which the person would not be able to perform activities of daily living. The amendments proposed in the draft 2021 Disability List were intended to assist schools and parents in more accurately drawing the distinction between expenses for education in the ordinary course, which would be incurred irrespective of whether the learner was living with a disability or not, and expenses for interventions required in consequence of disability, the latter of which would enjoy a tax privileged status under the Income Tax Act, 1962.

The stakeholder put forward the proposition that it was feasible for the schools to itemise their invoices and/or provide a letter to SARS separating the expenses for general education from those incurred in consequence of a disability, with the latter qualifying for tax relief. This appeared reasonable from the facts presented and the draft 2021 Disability List was accordingly prepared and workshopped with various stakeholders representing persons with disabilities before being published for general public comments.

Concerns were, however, raised by the public at large and some other schools. SARS has always been empathetic insofar as expenses required in consequence of disability are concerned and so decided to withdraw the draft 2021 Disability List in order to permit more time to engage with relevant stakeholders, consider the comments/suggestions raised, and clarify the intent behind the draft changes. It is only once this process has concluded that a further draft may be published.

Reply:

(1) The Public Investment Corporation (PIC) has not abandoned its inquiry into Musa Group. The section 417 enquiry is chaired by a Commissioner and run by legal teams on behalf of the liquidators. Currently the forensic accountant is analysing the information gathered during the first part of the enquiry.

(2) Following the completion of the section 417 enquiry and the receipt of the Commissioner’s report, the liquidators and the PIC will be in a position to decide what legal and other steps should be taken.

Reply:

It is not a function of the National Treasury to recover such amounts but well that of the related department. Once any formal processes in such cases have been concluded, and if it has been found that the department is to recoup monies from an individual or entity, then a debt must be recorded by the department on its financial system. It is only when such records are contained in systems controlled by the National Treasury that some report can be provided but again the correctness and completeness of such report will rely solely on the full and correct information submitted by the department itself.

Of such systems that National Treasury maintain, 84 individuals were identified from 17 National and Provincial Departments for the financial years 2016/17 – 2020/21 where cases were recorded on the Personnel and Salary System (Persal) where it relates to financial misconduct. The total amount of R 23 449 484,48 was recorded during this period on Persal where it relates to these cases where 13 individuals were dismissed.

The data for these cases and related individuals identified through Persal as per the above was then used to identify the appropriate recording of the related debt on the Basic Accounting System (BAS). Information for 46 officials of the 84 identified in Persal was captured in BAS with a debt take on amount of R 479 801,28. Of the take on amount recorded in BAS, R 385 697,91 has been recovered. The information is based on the appropriate recording of the data on BAS. And it must be emphasised that the correctness and completeness of this information is based on the appropriate recording of the data by the related institutions.