ATC130308: Report of the Select Committee on Finance on the 2013 Fiscal Framework and Revenue Proposals, dated 07 March 2013

REPORT OF THE SELECT COMMITTEE ON FINANCE ON THE 2013 FISCAL FRAMEWORK AND REVENUE PROPOSALS, DATED 07 MARCH 2013

1. I ntroduction

The Minister of Finance tabled the 2013 National Budget before Parliament on 27 February 2013 in line with section 27 of the Public Finance Management Act (PFMA), (Act 1 of 1999) and section 7(1) of the Money Bills Amendment Procedure and Related Matters Act 9 of 2009 (the Money Bills Act). Section 7(2) of the Money Bills Act requires the Minister to include, among other information, the proposed Fiscal Framework and Revenue Proposals in the tabled Budget.

According to section 8(3) of the Money Bills Act, the Standing and Select Committees on Finance must, within 16 days after the tabling of the Budget, report to the National Assembly (NA) and the National Council of Provinces (NCOP), respectively, on the proposed Fiscal Framework and Revenue Proposals. The Fiscal Framework gives effect to the national executive’s macro-economic policy and includes estimates of revenue, expenditure, borrowing, interest and debt servicing charges and an indication of the level of contingency reserves.

After the tabling of the Budget on 27 February 2013 and the engagement with the Minister of Finance on 28 February 2013, the Finance Committees held public hearings on 05 and 06 March 2013. Submissions were received from National Union of Metalworkers South Africa (NUMSA), Federation of Union of South Africa (FEDUSA), South African Institute of Tax Practitioners (SAIT), South African Institute of Chartered Accountants (SAICA), Pricewaterhouse Coopers (PwC), the Manufacturing Circle, Business Unity South Africa (BUSA) and the Financial and Fiscal Commission (FFC).

This report summarises the economic outlook; fiscal framework; revenue trends and tax proposals; government debt financing and the key issues emerging from the public hearings with the above-mentioned stakeholders.

2. The 2013 National Budget overview

The 2013 Budget was tabled at the time of challenging economic conditions globally and domestically. Since 2008, economic activity has remained subdued in many advanced economies. The slowdown in trade and investment has also affected emerging economies. There are signs of improvement in the world economy, though the outlook remains troubled. Emerging markets, particularly China and India continue to lead global growth.

The South African economy has grown since the 2009 recession but at a slower rate than projected at the time of the 2012 Budget. Strong public-sector capital investment, new electricity plants, stable inflation and low interest rates will support higher growth. The pace of economic recovery will depend on the rate at which private investment and exports strengthen.

The 2013 Budget is the first in which government’s plans to implement the National Development Plan are beginning to take shape. The plan sets out an integrated strategy for accelerating growth, eliminating poverty and reducing inequality while recognising that South Africa ’s urbanising, youthful population is strength on which to build.

The National Development Plan also recognises that government’s medium-term plans are framed in the context of a long-term vision and strategy. Over the longer term, the integration of the National Development Plan into government’s strategic and operational plans will strengthen alignment between the National Development Plan priorities and budgets and improve coordination across complementary areas of policy and expenditure.

The October 2012 Medium Term Budget Policy Statement noted that if the economic environment were to deteriorate, government would need to reassess its revenue and spending plans to narrow the deficit and stabilise debt. The 2013 Budget takes additional steps to maintain firm control of spending. South Africa ’s fiscal framework remains grounded in a sustainable countercyclical approach to managing revenue and expenditure.

Revenue collection has deteriorated due to a lower than forecast economic growth. Tax revenues are expected to improve over the medium term as economic growth accelerates. The main 2013 tax proposals include personal income tax relief, creation of an employment tax incentive and steps to encourage higher savings.

The proposed 2013 Budget framework makes provision for R1.1 trillion rand in the 2013/14 financial year to enable government to continue investing in infrastructure, health, education and social welfare. To ensure greater value for money, expenditure control systems and procurement will be strengthened.

3. Economic outlook

3.1 Global Economic developments

The International Monetary Fund (IMF) reported some signs of modest improvement in the global economy during 2012. The improvement had been driven by the emerging market economies and the United States ; better global financial conditions and strong capital flows to emerging markets. Many advanced economies contracted during the last quarter of 2012 and the economies of many European countries are in recession.

The IMF expects a gradual upturn in global economic growth in 2013. World economic growth is forecast to increase marginally from 3.2 per cent in 2012 to 3.5 per cent in 2013, averaging 4.1 per cent in 2014. These forecasts assume continuation of targeted monetary policy measures in advanced economies, easier financial conditions and China and India to continue leading global economic growth. According to Business Unity South Africa (BUSA), the global economy as a whole may be over its cyclical low point and the economies of the United States is likely to grow faster while China ’s growth rate is set to stabilise over the medium term.

The United States has averted the fiscal “cliff” but continued crisis in Europe , high global unemployment rate and inequality, oil price volatility and the uncertain trajectory of fiscal policy in major economies remain the major risks to the global economic outlook. This further indicates continued uncertainty in the global economy. Some of these risks could have implications for the South African economy through trade, capital flows and currency volatility as had been the case during the global economic and financial crises that arose in 2008.

3.2 South African economic performance and outlook

The domestic economy has continued to grow but at a slower rate than projected at the time of the 2012 Budget. Gross Domestic Product (GDP) growth reached 2.5 per cent in 2012. In the real economy, many sectors experienced weak growth during 2012. The Fiscal and Financial Commission (FFC) noted that subdued growth rate recorded in 2012 perpetuates the trajectory of sub-optimal growth, insufficient to make a dent in the country’s high unemployment rate. BUSA’s view is that South Africa must unlock its potential as the economy has grown at less than half the rate of its emerging market peers.

Contraction in the mining sector; muted growth in manufacturing and weaknesses in the services sector, attributed to a deceleration in consumer spending weighed down economic growth. Manufacturing is a driver of innovation, productivity and competitiveness, making the sector critically important for growth and development. Manufacturing production grew by 2.1 per cent in 2012, led by petrochemicals; wood and paper and food and beverages.

Mining output declined by 4 per cent due to strike related stoppages. The National Treasury estimates that the total value of mining production lost in 2012 amounted to R15.3 billion, up from R10.1 billion estimated in the October Medium Term Budget Policy Statement 2012. Mining remains a key sector in the domestic economy in terms of economic activity, job creation and revenue contribution.

Growth momentum in the agricultural sector was strong in the first nine months of 2012. Prolonged strikes in the Cape Winelands and minimum wage proposals may boost farm worker incomes but may result in job losses.

The South African economy is projected to grow by 2.7 per cent in 2013, 3.5 per cent in 2014, increasing marginally to 3.8 per cent in 2015. Robust capital investment spending by the public sector and rising exports are expected to support growth over the medium term. Additional electricity supply, water supply and rail capacity upgrades, relatively low inflation and interest rates environment and strong regional growth will also contribute towards positive growth. BUSA concurs with the 2013 growth rate of 2.7 per cent but cautions against inflation rate being at the upper end of the target band and exchange rate fluctuations. Both the FFC and BUSA highlighted the fact that the forecasts fall below the 5.4 per cent cited in the NDP as the growth rate level necessary to create jobs and reduce poverty.

The Budget Review 2013 predicts household consumption expenditure to average 3.1 per cent in 2013 and 3.9 per cent by 2015 having decelerated from 4.8 per cent in 2011. Household consumption is a key driver of the economy, accounting for 60 per cent of GDP. Its growth depends on the economy’s ability to create jobs, real disposable income growth, household indebtedness and consumer confidence and the interest rate environment.

Headline Consumer Price Index (CPI) is expected to remain within the target band of between 3 and 6 per cent over the next three years, averaging 5.6 per cent in 2013, 5.5 per cent in 2014 and 5.4 per cent in 2015. Statistics South Africa reweighted the CPI basket and that is expected to increase CPI by 0.3 per cent compared to the 2012 October MTBPS inflation forecasts. Moderate consumer demand is likely to contain core inflation over the medium term while currency weaknesses and rising municipal charges might put pressure on inflation in 2013.

In 2012, investment in fixed capital by general government offset a marked deceleration in private investment and increased the total Gross Fixed Capital Formation to 6.4 per cent compared to 4.5 per cent realised in 2011. Protracted strike activity, credit rating downgrades, perceived policy uncertainty influenced business confidence and private investment decisions. The outlook for investment expenditure remains positive over the medium term. Gross Fixed Capital Formation is forecast to grow at a rate of 5.7 per cent in 2013 reaching 6.5 per cent in 2015, supported by continued implementation of the national infrastructure programme and a moderate acceleration of the private sector investment.

Table 1: Macroeconomic projections 2009 to 2015

Calendar year	2009	2010	2011	2012	2013	2014		2015
	Actual			Estimate	Forecast
Percentage change unless otherwise indicated
Household consumption	-1.6	4.4	4.8	3.4	3.1		3.7	3.9
Government consumption	4.8	5.0	4.6	3.9	3.3		3.3	3.2
Gross fixed capital formation	-4.3	-2.0	4.5	6.4	5.7		5.9	6.5
Gross domestic expenditure	-1.6	4.4	4.6	4.1	3.4		3.9	4.1
Exports	-19.5	4.5	5.9	1.1	3.9		6.7	7.2
Imports	-17.4	9.6	9.7	7.2	5.9		7.2	7.3
Real GDP growth	-1.5	3.1	3.5	2.5	2.7		3.5	3.8
GDP inflation	8.3	7.2	6.0	5.2	6.6		6.3	6.0
GDP current prices (R b)	2,406	2,659	2,918	3,145	3,445		3,790	4,170
Headline CPI inflation	7.1	4.3	5.0	5.7	5.6		5.5	5.4
Current account balance (% of GDP)	-4.0	-2.8	-3.4	-6.1	-6.2		-6.3	-6.0

Source: Budget Review 2013, National Treasury

A large trade deficit and higher net current transfers abroad widened the current account deficit, a source of external vulnerability, to an estimated 6.1 per cent of GDP in 2012. Strong demand for government bonds and other investments has financed the deficit. Current account deficit is projected to widen slightly further, from 6.1 per cent in 2012 to average 6.2 per cent over the 2013 medium term. Continued supply-side disruptions, electricity rationing and slower than expected global recovery could lead to a larger deficit. On the other hand, the weaker rand and faster growth in African and other emerging market trading partners can boost export growth. South Africa will need to attract R703 billion over the medium term to finance the deficit.

In real terms, exports dropped from 5.9 per cent in 2011 to an estimated 1.1 per cent in 2012, while imports increased by 7.2 per cent. This reflects slowing global demand, falling prices of some major commodity exports, rand volatility and the impact of extensive disruption in the mining sector. The exchange rate volatility remained elevated in 2012 as global risk appetite responded to continued uncertainty in the euro area, weak global economic data and concerns over the US fiscal policy. Sentiment towards the Rand was negatively affected by the industrial action in the mining sector, the deterioration of the current account deficit and credit rating downgrades. In 2012, the Rand was 8.6 per cent weaker compared to 2011. Movements in the Rand will continue to reflect global risk appetite and investor sentiment towards South Africa .

The labour market has created about 82 000 formal sector jobs in the year to September 2012. The rate at which the economy created jobs was insufficient to absorb new entrants into the labour market. Broad unemployment rate (including discouraged jobseekers) increased to 33.2 per cent (6.8 million individuals). More than 40 per cent of those who are economically active, under the age of 30 and unemployed are youth. This requires innovative labour policies that would facilitate young people’s participation in the mainstream economy. As part of the employment tax incentives, the firms that hire young, unskilled workers will receive a tax credit. BUSA welcomes the budget’s focus on job creation but suggests that over the long term, SA should move from welfare to work.

Moderate employment growth is expected over the next three years. Fiscal constraints will limit public sector employment growth. Job creation prospects will depend largely on private sector hiring. The FFC is of the view that growth and employment can only be achieved through a combination of fiscal consolidation and investment in future growth.

South Africa ’s economic prospects remain closely linked to global developments. The real economy is expected to strengthen gradually over the medium term. Implementation of the National Development Plan will alleviate some structural constraints, strengthen growth and accelerate job creation while broadening social development and economic participation. The pace of economic recovery will depend largely on the rate at which private investment and export growth strengthen.

Risks to the domestic economic growth outlook include weaknesses in the mining sector, deterioration in the current account deficit, falling consumer and producer confidence and infrastructure constraints. BUSA is of the view that South Africa needs to diversify its markets to areas with better growth prospects.

4. Fiscal policy

South African fiscal policy is guided by the principles of counter-cyclicality, debt sustainability and intergenerational fairness. Accordingly, Government set three fiscal goals, namely, moderating expenditure growth to expand public services at a sustainable pace; stabilising debt and improving the impact of public spending, within a constrained environment.

The 2009 recession significantly reduced growth in the South African economy but government sustained expenditure levels despite a sharp decline in revenue. Currently, the economy and revenue have not yet fully recovered, leading to a widening budget deficit. A relatively larger budget deficit supports the economy in the short term but requires a stronger medium term path of consolidation to ensure debt sustainability. The FFC noted the evidence that government is committed to countercyclical fiscal policy and fiscal guidelines, with plans to reprioritise the budget while also marinating the social net. The Manufacturing Circle is also in support of this fiscal policy approach.

4.1 Fiscal Framework

The 2013 budget adjusts the fiscal framework to ensure a stronger path of consolidation towards debt sustainability. The FFC supports this move and believes that it is necessary to ease the frequency of sovereign debt downgrades. The 2012 MTBPS noted that in an event that the economic situation deteriorates, government would reassess its revenue and spending plans. The level of government resources depend on the rate at which the economic grows and the size of the tax base. Key elements of the 2013 fiscal outlook include the following:

· Reducing real expenditure growth to an average of 2.3 per cent over the next three years, compared to 2.9 per cent planned in October 2012;

· A reduction in the budget deficit to 3.1 per cent by 2015/16;

· Steps to reinforce growth, building on the competitiveness enhancement programme introduced last year;

· Initiation of a tax policy review; and

· A comprehensive review of expenditure, focusing on spending controls and value for money in government programmes and agencies; and

· Strengthening the capacity of the state to implement our plans and programmes.

Reduction in core spending plans include financing new policy initiatives from savings, efficiency gains and reprioritisation over the next three year; analysis of personnel spending; phasing out of projects that are ineffective or no longer aligned with policy priorities and assessment of the appropriateness of tax policy. FEDUSA welcomes the Minister’s assurance that government would adhere to fiscal sustainability by changing spending and revenue plans if economic conditions dictate.

FEDUSA further supports the efforts to reduce the deficit over the medium term and the broader counter-cyclical fiscal policy stance adopted by government. The spending cuts of R10.4 billion over the next three years will assist to stabilize the economy.

Currently, moderate growth resulted in a revenue shortfall amounting to R16.3 billion. In line with the countercyclical fiscal stance, the budget deficit is now estimated at 5.2 per cent of GDP in 2012/13. The outlook for economic growth over the medium term has weakened and government net debt is now expected to stabilise at 40.3 marginally higher than 40 per cent of GDP. The budget deficit is projected to decrease to 3.1 per cent in 2015/16 as economic activity accelerates, expenditure growth slows down and revenue collections gather pace.

The consolidated fiscal framework makes R1.149 trillion available for spending in 2013/14, R1.244 trillion in 2014/15 and R1.334 trillion in 2015/16 financial year. Over the next three years, expenditure is expected to grow at a moderate average rate of 2.3 per cent, in real terms. Revenue of R985.7 billion in 2013/14, R1.091 trillion in 2014/15 and R1.199 trillion in 2015/16 financial year has been set aside. The current framework brings national and provincial government, social security funds, public entities under the purview of a single budget process. Debt-service costs are expected to peak at 2.8 per cent of GDP from the current financial year and over the medium term.

Table 2: Consolidated fiscal framework

Rand billion/ percentage of GDP	2009/10	2010/11	2011/12	2012/13	2013/14	2014/15	2015/16
	Outcomes			Revised estimates	Medium-term estimates
Revenue	664.5	757.2	836.9	887.8	985.7	1 091.1	1 199.8
	27.1%	27.7%	28.1%	27.7%	28.0%	28.1%	28.1%
Expenditure	824.1	877.5	954.2	1 055.9	1 149.4	1 244.3	1 334.1
	33.6%	32.1%	32.1%	32.9%	32.6%	32.1%	31.2%
Non-interest expenditure	766.9	811.3	877.7	967.6	1 049.6	1 135.6	1 215.9
	31.3%	29.7%	29.5%	30.2%	29.8%	29.3%	28.5%
Debt-service cost	57.1	66.2	76.5	88.3	99.7	108.7	118.2
	2.3%	2.4%	2.6%	2.8%	2.8%	2.8%	2.8%
Budget balance	-159.6	-120.4	-117.3	-168.0	-163.7	-153.2	-134.4
	-6.5%	-4.4%	-3.9%	-5.2%	-4.6%	-3.9%	3.1%
Primary balance	-4.2%	2.0%	-1.4%	-2.5%	-1.8%	-1.1%	-0.4%

Source: 2013 Budget Review, National Treasury

The National Development Plan targets an annual growth rate of more than 5 per cent of GDP in 2012/13. If government succeeds on this growth trajectory and revenue doubles in the next two decades, new policy initiatives such as the national health insurance and major infrastructure projects would become affordable with limited adjustments to tax policy. National Treasury still maintains that if the economy continues to grow moderately, significant adjustments to spending and revenue would be required.

Over the longer term, faster and more inclusive economic growth is required to create jobs, widen the tax base and generate sufficient revenue to support government priorities. National Treasury has prepared a report that considers fiscal sustainability from a long-term perspective. The report will be tabled for Parliament’s consideration.

4.2 Revenue

Budget 2013 projects total consolidated government revenue of R 887.8 billion in 2012/13 (R16.7 billion less in taxes), R985.7 billion in 2013/14 (revised down from R1.005 trillion in October 2012) and R1.091 trillion in 2014/15 compared to R1.118 trillion previously predicted. Supply disruptions in the mining sector and a modest growth than expected resulted in a downward adjustment of revenue forecasts over the medium term.

Consequently, estimated tax revenue for 2012/13 has been revised down by R16.3 billion to R810.2 billion. Compared with Budget 2012, gross tax revenue for 2013/14 is revised down by R13.2 billion to R898.0 billion and by R27.8 billion in 2014/15 to R991.8 billion. Corporate Income Tax (CIT) is expected to stabilise at a lower share of GDP than during the mid-2000s yielding R156.4 billion, 3.1 per cent less than the 2012 budget estimate. Personal Income Tax (PIC) is also lower than expected for 2012/13, with expected revenue collection of R286 billion (9.4 per cent less). Reduction in tax revenue could be attributed to sluggish employment growth coupled with mining sector disputes, the latter of which also led to reduced mineral royalties. Personal Income Tax, Value Added Tax and Corporate Income Tax, remain the main contributors to total tax revenue.

Total consolidate budget revenue is expected to stabilise at 28 per cent of GDP over the medium term. Government’s tax revenue is highly dependent on the developments in economic conditions globally and domestically. Ensuring sustainability and rebuilding fiscal space will require aligning structural revenue and expenditure.

4.3 Expenditure

The proposed budget framework reflects government’s continued commitment to investing in infrastructure, health, education and social welfare. The consolidated fiscal framework makes R1.149 trillion available for spending in 2013/14, R1.244 trillion in 2013/14 and R1.334 trillion in 2015/16 financial year. Over the next three years, in real terms, non-interest expenditure is expected to grow at a moderate average rate of 2.3 per cent compared to 2.9 per cent projected in October 2012. As a percentage of GDP, total consolidated government expenditure is expected to average approximately 32 per cent over the medium term.

Since the publication of the MTBPS in October 2012, government has taken the additional step of moderating spending growth over the next three years to offset the effects of lower revenue collection on the deficit. These steps include the following:

· Trimmed growth in national department expenditure;

· Reduced the contingency reserve by R23.5 billion;

· Reprioritised R52.1 billion in support of key priorities;

· Reduced core spending by R10.4 billion over the medium term; and

· Expenditure reviews are expected to increase the efficiency of spending and eliminate waste.

Over the medium term, government will moderate growth in employee compensation, progressively reduce capital under-spending, accelerate roll out of infrastructure and eliminate waste in goods and services budgets. Compensation of employees as a percentage of spending declines over the medium term, growing at an annual average of 1.3 per cent in real terms. The multi-year wage settlement reached in 2012 provides greater certainty against unexpected wage increases. Interest payments for debt are projected to be the fastest-growing expenditure item over the medium term, followed by real capital expenditure.

BUSA believes that the public sector wage bill will rise sharply in the year ahead, despite the multi-year wage agreement. Although it is then projected to grow more slowly over the next two years, there is a possibility that the recently announced review of public sector wages could distort these projections.

NUMSA proposed that the Minister takes steps to curb wasteful expenditure on consultants by both the national and provincial departments. The SAIT highlighted overall efficiency in government spending as one area that needs tighter controls and monitoring.

The 2013 budget framework includes a contingency reserve of R20.5 billion over the medium term, R4 billion in the 2013/14, rising to R6.5 billion in the 2014/15 and R10 billion in 2015/16. The contingency reserve serves to finance any unforeseen and unavoidable expenditure not included in the baseline. It enables government to absorb risks, but remains lower in the beginning of the medium term.

4.4 Fiscal sustainability

Over the medium term, total consolidated revenue is projected to amount to R985.7 billion in 2013/14 rising to R1.199 trillion in 2015/16. On the other hand, consolidated government expenditure is forecast at R1.149 trillion in 2013/14 reaching R1.334 in 2015/16. This translates into a budget deficit of 4.6 per cent (R163.7 billion) in 2013/14 declining to 3.1 per cent (R134.4 billion) in the outer year, as a percentage of GDP.

It is expected that revenue will recover alongside economic growth and moderate expenditure increases. Budget deficit widened to 5.2 per cent of GDP in 2012/13 but National Treasury remains optimistic that as the economy continues to grow in 2015/16, the deficit would decline. Lower borrowing for current spending, alongside sustained spending on capital investment will improve the composition of the deficit. The FFC noted that the slowing down of fiscal consolidation since 2009 meant that South Africa would be unlikely to achieve the projected 3.1 deficit as a percentage of GDP in 2015/16.

South Africa’s strong countercyclical response to the crisis has eroded fiscal space. The fiscal framework accommodates a wider deficit this year but is adjusted to stabilise the debt over the medium term. The level at which debt stabilises is marginally above the October 2012 level estimate of 40 per cent.

The public sector borrowing requirement is expected to widen to 7.4 per cent of GDP in 2012/13, up from 7.1 per cent projected a year ago, largely as a result of the wider budget deficit. Borrowing by state-owned companies is expected to decline from 2.1 per cent of GDP in 2012/13 to 1.1 per cent of GDP by 2015/16, of which Eskom and Transnet remain the largest contributors.

The costs of servicing government debt are influenced by the volume of debt, new borrowing and market variables such as interest, inflation and exchange rates. Debt service costs continue to grow over the medium term, draining resources that could be spent on productive investment. Government debt cost is projected to rise from R99.7 billion (2.7 per cent of GDP) in 2013/14 to R118.2 billion (2.6 per cent of GDP) in 2015/16. The domestic bond market will remain the primary source of debt funding. High public debt is likely to remain a feature of the South African economy for some time into the future and government will have to closely monitor debt levels and ensure that it is aligned to fiscal sustainability objectives.

The National Treasury has prepared a long term fiscal report that projects expenditure trends over the next 15-25 years based on demographic trends and economic scenarios. It is expected that as the economy strengthens, government will consolidate the fiscal position by maintaining the rate of expenditure growth in line with increasing economic potential, reducing the level of debt. National treasury noted that new projects such as the National Health Insurance will require much faster growth, expenditure shifts or increases in taxes. The FFC recommended that government further enhance long term reporting by including a gender dimension and an integration of consolidated local government budget to complete the fiscal framework.

5. Revenue trends and tax proposals

5.1 Consolidated budget revenue and revenue trends

Consolidated budget revenue consists of tax revenue net of Southern African Customs Union transfers, departmental revenue, mineral royalties, social security fund revenue and provincial and public entity own revenue. The revised tax revenue estimate for 2012/13 of R810.2 billion is R67.3 billion higher than in 2011/12 but R16.3 billion lower than the Budget 2012 estimate. Tax revenue slowed in response to conditions in the domestic economy including labour unrest and conditions in the global economy.

Personal Income Tax, Corporate Income Tax and fuel tax revenues were R12 billion, R11 billion and R2.3 billion less than the initial estimates made a year ago, respectively. Collection of Value Added Tax (R7.3 billion more) and customs duties (R1.5 billion more) was better than expected. In light of these developments, the projected gross tax revenue collections over the medium term have been revised downwards from the estimates made during October 2012. Higher revenue collections will depend on an improved economic growth outlook.

As a percentage of GDP, gross tax revenues have increased from 22.1 per cent in the 1980s to an average of 25 per cent over the past decade. Revenues from PIC (R306.188 billion in 2013/14), VAT (R242.99 billion in 2013/14) and CIT (R169.83 billion in 2013/14) account for more than 80 per cent of total budget revenue. Corporate Income Tax revenue from the mining sector is volatile, driven by global commodity prices and the rand exchange rate. This revenue is expected to decline in 2012/13 largely due to lower commodity prices and labour unrest.

5.2 Individual tax proposals

The 2013 Budget proposes the following:

· Personal income tax relief of R7 billion and medical tax credit relief of R350 million;

· Fringe benefit relief for low-cost employer-provided housing;

· Tax-preferred savings and investment accounts to be phased in by 2015;

· Harmonised tax treatment of contributions to pension, provident and retirement annuity funds, while protecting vested rights;

· Monthly tax credits for medical scheme contributions will be increased;

· Administrative measures to assist taxpayers with multiple sources of income, with potential temporary relief in the case of widows and widowers;

· Legislative measures to address tax avoidance through trusts;

· All citizens over a designated age would be eligible for the grant, irrespective of income level.

5.3 Business tax and indirect tax proposals

The 2013 Budget proposes the following:

· A youth employment tax incentive for young first time job seekers;

· Further tax relief for small businesses, including a revision to the graduated tax structure for small business corporations;

· Tax incentives for special economic zones designed to attract investment;

· Tax avoidance as a result of excessive debt to be addressed;

· Employment share schemes will be subject to uniform tax treatment;

• Introduction of carbon tax and phasing out of electricity levy from 2015 as well as an energy-efficiency savings tax incentive;
• Increase in fuel taxes and the vehicle CO2 emissions tax;
• Increase in plastic bag and incandescent light bulb levies;
• Support for a new bio-fuels industry in South Africa;
• Increase in taxes on alcohol and tobacco; and
• Foreign businesses supplying digital goods and services will have to register for VAT.

The 2013/14 tax proposals reduce total tax revenue by a net of R2.4 billion. Revenue is expected to increase from 25.2 per cent in 2012/13 to 25.7 per cent of GDP in 2015/16. The FFC, FEDUSA, PwC and BUSA supports the call for a major tax reform during the course of the year as well as personal income tax relief and tax breaks to small businesses.

A tax review will assess whether present tax policy is appropriate to support government’s objectives of inclusive growth, employment, development and fiscal sustainability. As the National Development Plan notes, the best way to generate resources to implement the national vision is to grow the economy more rapidly. The Manufacturing Circle recommends that the pending fiscal review focuses on the tax side with purpose of broadening the tax base as opposed to increasing the burden on existing private-sector taxpayers.

NUMSA supports the proposed tax policy review and hopes that the policy would not only expand the number of zero rated goods on VAT but also be redistributive by taxing luxury goods. The Union further welcomes government’s plans to address tax avoidance by multinational companies.

5.4 Longer term tax considerations

The longer term tax considerations include reviewing mining taxation as part of the broader review of the tax system, National Health Insurance and retirement reform. The mineral and petroleum royalty regime has broadened the tax base and allowed for increased revenue during periods of high commodity prices, while providing relief to marginal mines when commodity prices and profitability are low.

The NHI pilot projects have been established in 10 districts, covering 10 million people in nine provinces. These pilots are working on various new models for health-care provision and financing. National Treasury is currently working with the Department of Health to examine the required funding arrangements for NHI. A discussion document will be published in 2013.

FEDUSA and its affiliates remain concerned about the lack of consultation on the NHI process between the Department of Health and relevant stakeholders. FEDUSA would appeal to government to bring the process within the ambit of National Economic Development and Labour Council (Nedlac) where social partners in a joint effort collaborate on matters of socio-economic impact. NUMSA saw little progress on the NHI implementation regarding new allocations and lack of a coherent health policy framework. SAIT await the documentation that explains how the NHI would be funded.

Over the next three years, the means tests for the old age grant will be phased out. The structure of tax rebates will be changed to offset the additional expense. National Treasury is preparing legislation for retirement industry reform, i ncluding measures to increase levels of preservation, enhance the portability of retirement funds upon change of employment, and unify tax treatment of retirement contributions.

5.5 Tax administration

With regards to tax administration, SARS will continue with efforts to arrest aggressive tax planning, base erosion and profits shifting. VAT registration will be streamlined to ease the compliance burden while guarding against fraud. A new company income tax form will be introduced that requires fewer fields to be completed by smaller businesses.

During 2012 it was announced that the tax clearance system would be strengthened to ensure that non-compliant taxpayers cannot do business with the state. SARS is now testing an automated tax clearance certificate for implementation later this year. This will enable the real-time tracking of the tax compliance of the person who tendered.

SARS has continued to uncover illicit activities related to customs duty fraud, smuggling of goods, counterfeiting, round tripping and trans-shipments, as well as tax evasion and money laundering. In collaboration with labour and business, reference-pricing risk indicators to detect and deal with potential undervaluation of imported clothing, textile and home-ware products have been introduced. SARS is working with the Department of Home Affairs and other agencies to register small and micro businesses, including those operated by foreigners.

National Treasury will also undertake research during 2013/14 on VAT treatment of financial services and sustainable financing of local government.

6. Asset and liability management

Government finances its debt through borrowing in domestic and international financial markets. Fiscal policy works to ensure that debt levels remain sustainable. Since the onset of global financial crisis and the recession that followed, government allowed for budget deficit in line with the countercyclical fiscal approach adopted. Government has been able to secure borrowing to cover deficits at a reasonable cost.

Total national government net loan debt stood at R1.2 trillion (36.3 per cent of GDP) in 2012/13 and it is expected to peak at R1.7 trillion (40.3 per cent of GDP) in 2015/16. Over the next three years, government needs to borrow an additional R497 billion. As a result, interest costs will rise to R88.3 billion in 2012/13 and to R118.2 billion in 2015/16. Government is committed to managing its debt in a manner consistent with the principles of sustainability and intergenerational equity.

6.1 Developments in South Africa’s debt markets

Demand for South African domestic bonds remained strong during 2012/13, anchored by a global search for higher yield and positive growth prospects in emerging markets. Domestic bonds also benefited from South Africa’s listing in Citigroup's World Government Bond Index in October 2012, exposing government paper to a new set of investors.

Capital inflows have helped to finance government’s infrastructure investments and kept borrowing costs low. Government takes cognisance of the riskiness of increased investment from international markets such as exchange rate volatility and the probability of rapid withdrawal of capital.

From January to December 2012, emerging market governments issued US$375 billion in bonds, surpassing the US$306 billion issued in 2011. New issuances have been characterised by lower interest rates, oversubscribed order books and a record number of issuers. This trend supports government’s continued access to global finance for its foreign currency commitments.

6.2 Consolidated government borrowing requirement and financing

Consolidated government borrowing requirement includes the financing of national and provincial government, the social security funds and national extra-budgetary institutions. Government borrows to refinance its redeeming debt. Consolidated borrowing is estimated to increase to R159.8 billion in 2012/13, before declining to R131.3 billion in 2015/16. Extra-budgetary institutions such as South African National Roads Agency Limited (SANRAL), Trans-Caledon Tunnel Authority and water board project also raise loans to finance large-scale infrastructure investment.

Net borrowing requirement is expected to amount to R176.3 billion in 2012/13 and declining to R151.9 billion in 2015/16. Net borrowing requirement is financed through loans made in the domestic and global markets. In 2012/13, domestic short term loans increased by R22 billion in 2012/13 while long term loan issuance reached R161.6 billion.

Over the medium term, government intends to borrow about US$1.5 billion a year in global markets to maintain benchmarks in major currencies and meet part of its foreign currency commitments.

Total cash with the Reserve Bank and commercial banks reached a high of R194.8 billion in 2011/12. Cash balances are projected to decline to R151.4 billion in 2014/15 as cash is used to finance part of the gross borrowing requirement. In 2015/16, cash balances will increase to R174.8 billion to provide for large redemptions beyond the medium term.

6.3 State-owned companies and Development finance institutions

Over the medium term, capital expenditure by state-owned enterprises is projected at R377.5 billion. The majority of this investment will take place in energy and transport (Eskom and Transnet account for 87 per cent of this amount) and in the water sector.

To sustain their infrastructure plans, state-owned enterprises need strong balance sheets. Government is reviewing its holdings of these entities to direct capital to investment priorities. It will also be necessary to forge strategic partnerships with private firms to co-invest and bring technical expertise to large public infrastructure projects. An example of this approach has been the renewable energy independent power producer programme, which attracted R46.6 billion worth of investments from the private sector in 2012/13.

Government will continue to support state-owned enterprises and, through prudent financial oversight, ensure that they remain financially sound and contribute to the rollout of economic infrastructure.

Aggregate assets of development finance institutions at 31 March 2012 amounted to R201.5 billion, of which the Industrial Development Corporation (IDC) holds 56 per cent (R112.2 billion), the Development Bank of Southern Africa (DBSA) 26 per cent (R52.3 billion) and the Land Bank 13 per cent (R25.4 billion). Growth in the asset base has enabled these institutions to borrow against their balance sheets to extend loans to the value of R81.1 billion.

Over the next three years, these institutions will concentrate on financing infrastructure and industrial development, low-cost housing, rural development and land reform, small business growth and black economic empowerment enterprises, and regional development.

7. Infrastructure

South Africa’s infrastructure investments will increase the ability of the economy to grow in an inclusive manner while improving delivery of basic services to all citizens. The NDP provides clear guidelines for capital investment priorities.

Government has estimated spending of R642 billion over the last three years, planned spending on infrastructure projects by the public sector totals R827 billion over the medium term. A substantial number of projects are in progress or about to get under way. Weaknesses in planning and capacity, however, continue to delay implementation of some projects. Steps are being taken to address these problems. BUSA highlighted the infrastructure programme as a vehicle to support growth and create jobs and also noted that SA needs about R200 billion in capital inflows to finance its current account deficit and supplement its limited domestic savings.

Government has expanded initiatives to improve planning, procurement and project management. In real terms, public and private sector capital spending shows improvement. The Presidential Infrastructure Coordinating Commission (PICC) has also concentrated its efforts over the past year on improved planning and decision processes. The Manufacturing Circle reported a marked improvement in respect of progress with local procurement.

According to the NDP, gross fixed capital formation needs to reach about 30 per cent of GDP by 2030, with public sector investment reaching 10 per cent of GDP, to realise a sustained impact on growth and household services. Improved and timely maintenance of infrastructure is also an important requirement for efficient transport, electricity and water service delivery.

The value of major infrastructure projects are in progress or under consideration in the public sector totals R3.6 trillion. There are also several private-sector projects identified in the strategic integrated projects of the PICC, bringing the total value of projects being considered to over R4 trillion. About 40 per cent of these projects are in implementation. All projects will be assessed rigorously to ensure maximum public benefit.

Table 3: Mega projects under consideration between 2013 and 2023

Project Stage
R billion	Concept	Pre-feasibility	Feasibility	Financing	Detail design	Tender	Construction	Ongoing programmes	Total	% of Total
Water	-	-	20	47	22	7	15	20	131	3.6
Transport	383	-	130	19	52	88	25	126	823	22.9
Electricity	300	53	550	-	98	464	385	152	2 002	55.7
Liquid fuels	-	3	209	8	-	-	23	-	243	6.8
Education	12	-	-	68	-	-	18	34	133	3.6
Health	-	-	50	29	-	-	-	37	116	3.2
Telecommunication	12	-	-	0	4	16	3	-	36	1.0
Human Settlement	-	-	-	84	-	-	26	-	110	3.2
Total % total expenditure	707 19.7%	56 1.6%	958 26.7%	256 7.1%	176 4.9%	575 16.0%	496 13.8%	368 10.2%	3 592 100.0%

Source: National Treasury 20013 Budget Review

Electricity

A sufficient and affordable supply of electricity is needed to sustain economic activity and ensure quality of life for South African households. South Africa’s electricity supply constraint will ease as the first power from new coal-fired plants becomes available in 2014. Eskom’s capital investment programme is the largest in the public sector. The commissioning of its two large coal-fired power plants, Medupi and Kusile, has been delayed by labour unrest, weak contractor performance and skills shortages. The first units of these plants are expected to deliver electricity to the grid in 2014 and 2015. The Ingula pumped storage scheme is on schedule for 2014, and the Grootvlei and Komati return-to-service power stations are operating, though not yet at full capacity.

The increase in generation capacity is complemented by Eskom’s large investments to expand and upgrade the transmission grid. Both Eskom and municipalities are investing in distribution infrastructure to replace or upgrade outdated equipment.

Transport

Passenger Rail Agency of South Africa (PRASA) is working to improve the quality and capacity of its commuter rail services. It has begun a 20-year procurement programme for rolling stock. Transfers from the fiscus totalling R4.2 billion have been allocated for this purpose over the next three years, complementing revenue raised from user chargers, an average annual growth of 20.5 per cent to expand rail infrastructure. Contract negotiations are in progress and the first coaches will be delivered in 2015.

Investment in bus rapid transport systems continues in Johannesburg and Cape Town, with Tshwane, Nelson Mandela Bay, Rustenburg and eThekwini expected to begin construction of their networks in 2013. During 2012 the final Gautrain link was completed, which will help to alleviate highway congestion in and around Johannesburg.

South African National Roads Agency Limited (SANRAL) is responsible for national road maintenance and upgrading. SANRAL spent R2.9 billion on non-toll roads and R1.1 billion on toll roads in the first half of 2012/13. Government has allocated R32.9 billion to SANRAL over the medium term period for national road improvements and R2 billion for rehabilitation of coal haulage roads in Mpumalanga. Provincial spending on roads is expected to total R27.6 billion over the medium term. User charges raised through toll fees remain an important additional source of funding for national roads.

The Airports Company of South Africa completed its core capital investment programme in 2011. Capital spending has subsequently tapered off to R237 million in the first half of 2012/13.

Improving infrastructure delivery

There has been a steady increase in overall infrastructure expenditure by the public sector, including capital and maintenance spending. However, there are many areas within government and the broader public sector where infrastructure delivery is weak, characterised by delays, poor planning, lack of project management capacity and inadequate oversight.

Thorough planning is needed to accelerate the delivery of infrastructure. Most failures to meet project deadlines, budgets or specifications are the result of insufficient planning. Feasibility studies during the planning stage are also instrumental in assessing whether a project represents value for money. Regulations governing planning requirements will therefore be strengthened, and evidence of credible feasibility studies will be required to show that a project is worthy of support from the fiscus . FEDUSA welcomes the scrutinizing of 76 business entities with contracts worth R8.4 billion, which might have infringed procurement rules. It is also important that SARS audits more than 300 businesses that were awarded contracts with government worth more than R10 billion.

Over the next three years, national and provincial government and state owned companies intend to spend R827 billion on infrastructure particularly on projects in the energy and transport sectors. Over the medium term, the fiscus provides R429 billion for projects that address social needs. Over the longer term, most projects involve economic infrastructure projects, with clearly identifiable users that will pay for the services they receive. State owned companies to spend R397 billion.

NUMSA expressed its dissatisfaction with the manner in which government had managed the infrastructure programme. The fact that Transnet continues to award significant tenders to international companies, specifically from China, undermines the local procurement accord signed by social partners.

Recent progress on building capacity includes infrastructure delivery improvement programme; municipal infrastructure support agency; infrastructure skills development grant; neighbourhood development programme; cities support programme; new infrastructure procurement regulations and National Treasury uniform budgeting and reporting standards by municipalities. Government’s infrastructure investment priorities are guided by the broad framework established in the NDP. Progress is being made at all levels of infrastructure delivery.

8. Committee Observations

Having considered the 2013 National Budget and public submissions, the Select Committee on Finance amongst others, made the following observations:

· The Committee noted that the NDP provides a framework for predictability and certainty in policy to strengthen investor confidence. The Committee welcomes the alignment of the Budget with the NDP;

· Concerns regarding registration as a vendor for purposes of VAT as issues currently faced by individuals pose a serious hindrance to doing business in South Africa. Despite submissions and consultations with National Treasury and SARS by SAICA, no amendments were made;

· SAICA cautioned that there is no need to change the taxation trusts legislation based on tax avoidance concerns only. The proposed amendments should be carefully considered;

· SAICA cautioned that change in legislation that deals with Cross border services and pensions could have a negative impact on the South African economy such as loss of skills, erosion of confidence on government and discourage investment in SA. SAICA believes that it would be beneficial to allow a deduction to any retirement fund local or offshore and tax payouts from the funds instead, irrespective of where the fund pays out from. SAIT is equally concerned about withholding tax on service fees paid;

· SAICA seeks clarity on Transfer Pricing Practice Note as the new legislation does not contain a thin capitalization requirement;

· PwC generally welcomes the tax rate relief, r etirement contributions , t ax preferred savings and investments and the i ncentives for youth employment in case of individuals. On the business side efforts aimed at tax relief, special economic zones, certainty on interest-deduction restrictions, gateway subsidiaries, registration and filing and tax clearance certificates are also supported;

· The reservations from the PwC include personal income tax burden since 10 percent of taxpayers will pay 60 per cent; capped contributions to retirement funds, conduit principle for trusts, withholding tax on service fees and carbon tax. PwC proposes that government prioritises such that obstacles are removed before incentives are provided;

· SAIT welcomes the establishment of a commission of enquiry into tax policy;

· SAIT supports the implementation of tax incentives similar to the youth employment tax incentive for businesses in Special Economic Zones. These entities will be entitled to a tax deduction or credit for each person they employ, regardless of the person’s age;

· Like PwC, the SAIT has reservations about the change to the taxation of trusts (termination of conduit principle) as the reasons for that are not clear;

· The SAIT suggested that empirical research be conducted to determine whether the proposed gambling taxes would assist in discouraging excessive gambling in South Africa;

· The SAIT proposes that the aim of carbon tax should be to reduce greenhouse emissions, not to increase government revenue. Therefore, such revenue should be ring-fenced;

· SAIT is concerned that welfare grants are not sustainable and alternatives need to be earnestly considered by the government. Increases in social assistance must at least match the inflation rate, according to NUMSA. FEDUSA is concerned about the growing social grant dependency and urges National Treasury to investigate measures that will increase the return on such social investment;

· The FFC supports main themes in 2013 Budget on how government plans to use levers to boost economic growth but through enhanced efficiency and sustainability;

· The FFC is concerned that allocation to contingency reserve has been reduced over the medium term and that the slower pace of fiscal consolidation raises credibility issues. BUSA is also concerned about the timing of the peak in debt being continually postponed;

· The FFC welcomes government’s aim of fiscal consolidation through expenditure efficiencies and control as opposed to tax increases. BUSA and PwC share the same sentiments;

· The FFC believes that government expenditure with regards to government economic programmes highlighted in the 2013 Budget must be responsive and highly productive;

· The FFC supports the proposed comprehensive carbon tax proposed for 2015/16 but notes that this tax revenue must be ring-fenced for it to be a true instrument for behavioral change, environmental sustainability. FEDUSA agrees with carbon tax over a phased period of time as a measure to mitigate the impact of climate change. The Manufacturing Circle requires further engagement with regards to this proposal;

· The FFC proposed improvement in fiscal reporting over the long term to take into account distributional impact of new policies particularly on gender and children and to take into account Local Government contribution to infrastructure development;

· The FFC informed the Committees that they have already done some research work on the issue of township and village economies driving growth as opposed to metro’s taking the lead and will share that with the Committees in the 2014 submission;

· Except for the NUMSA, raised reservations with the NDP, all stakeholders consulted are in agreement of the development and adoption of the NDP as the key driver for policy-making as an achievement;

· BUSA sees the NDP as roadmap for South Africa, extending beyond the electoral to provide a framework for predictability and certainty in policy to strengthen investor confidence. The implementation of the plan should be monitored. SAIT supports the budget and the fact that it uses the NDP as its point of departure;

· BUSA recommended a policy on administered prices following a recent decision by NERSA on Eskom tariff application. The Manufacturing Circle would like to see a report that addresses administered price increases against a background of other domestic inefficiencies within Eskom;

· BUSA further indicated its willingness to join partnerships that address capacity shortfalls at all levels of government;

· FEDUSA is of the opinion that the inflation rate could probably be higher and remain longer outside the target band;

· FEDUSA recommended that government designs a tax incentive scheme for Special Economic Zones with great care to avoid unintended consequences like was the case with Atlantis and Butterworth. The Manufacturing Circle welcomes allocations for the Special Economic Zones scheme. PwC sees the scheme as having potential for establishment of new businesses but cautions that these schemes can never address other shortcomings;

· Furthermore FEDUSA expressed reservations about the fuel levy increase as that may have a negative impact on all South Africans;

· FEDUSA would like to see the National Budget addressing the gender inequality and urges the Ministries especially of Health, Women, Children and People with Disabilities, Labour and Social Development to restructure their programmes and budgets to reflect gender. FFC supports FEDUSA in this regard;

· FEDUSA raised concern with the agricultural sector, specifically the wine industry to prevent SA products from becoming too expensive in global markets;

· The Manufacturing Circle advocates for an industrial policy measure to help off-set the electricity price increases. Electricity prices increased by 230 per cent since 2003 while other emerging countries cut tariffs;

· NUMSA is concerned that the adoption of the NDP as the bedrock of the country’s growth trajectory means that macroeconomic policy framework will continue to place financial capital at the centre of policy and will continue to fail to support job creation and broad-based industrialisation;

· NUMSA continue to hold the view that a youth wage subsidy or youth employment incentive may create unintended consequences for jobs currently held by permanent employees. PwC on the contrary, welcomes the incentive and look forward to further details of how this will work; and

· NUMSA and FEDUSA support the establishment of a Parliamentary Budget Office to ensure that fiscal policy is aligned to government priorities.

9. Recommendations

Having considered the 2013 Fiscal Framework and Revenue Proposals and conducted public hearings, the Select Committee on Finance recommends that the House accepts the 2013 Fiscal Framework and Revenue Proposals.

The Select Committee on Finance further recommends as follows:

9.1 The Minister of Finance and the Commissioner of the South African Revenue Services should consult with the tax industry and submit to the House the draft amendments of the legislation pertaining to registration as a vendor for Value Added Tax purposes. This would facilitate and encourage business development in South Africa. These amendments should be submitted within six months of the adoption of this report by the House;

9.2 The Minister of Finance should submit a report to the House summarising the research on taxation trusts including the reasons for the proposed changes given that the SARS and National Treasury managed to reduce tax avoidance over time in accordance with the current existing laws. Relevant stakeholders should also be consulted prior to Parliament enacting the amendments. This report should be submitted within three months of the adoption of this report by the House;

9.3 Pertaining to cross border services and pensions, the Minister of Finance should submit to the House analysis exploring a deduction to any retirement fund, local or offshore, and tax payouts from the funds instead of the proposed amendments, irrespective of where the fund pays out from. This analysis should be submitted within three months of the adoption of this report by the House;

9.4 The Minister of Energy should develop a policy on inflation related administered prices that could assist the National Energy Regulator to contain electricity prices, given the impact of electricity increases on inflation and the economy, and table it for debate in Parliament, within six months of the adoption of this report by the House. The policy could be used to contain electricity prices given the impact of electricity increases on inflation and on the broader economy;

9.5 The Minister of Finance should, within three months of the adoption of this report by the House, submit a report on the proposed incentives for the Special Economic Zones, including an implementation plan and a report on the total package benchmarked against the offering in similar zones in other emerging markets;

9.6 The National Treasury should submit to the House a funding model for NHI, whilst ensuring that low income taxpayers are not burdened, and submit its findings within six months of the adoption of this report by the House;

9.7 The Minister of Finance should prioritise the implementation, monitoring and evaluation of programmes that target job creation to ease the burden on the unsustainable social welfare. National Treasury should also consider investigating measures that will increase the return on such social investment;

9.8 National Treasury should encourage departments to limit the use of consultants, given the costs incurred in the past three years, but should encourage development of internal capacity;

9.9 The National Treasury, in collaboration with financial institutions, should roll-out campaigns to educate and encourage South Africans on matters of household savings;

9.10 The Minister of Finance should prioritise the appointment of the Tax Ombud for the South African Revenue Services as Parliament has passed a law during 2012/13 financial year in this regard;

9.11 National Treasury should submit to Parliament a report detailing the time frame assigned to the commission that would review the tax policy framework and how it would support the objectives of inclusive growth, employment and fiscal sustainability, this report should be submitted within three months of the adoption of this report by the House; and

9.12 The Committee noted significant progress regarding the appointment of the Chief Procurement Officer in the National Treasury, and the role played by National Treasury in combating corruption, however, the establishment of this directorate should be accelerated given the levels of corruption in government departments. The capacity of law enforcement agencies such within SARS, the Directorate for Priority Crimes (the Hawks), the Special Investigating Unit (SIU), and the Asset Forfeiture Unit need to be enhanced to enable the speedy prosecution of corrupt officials and businessmen, as well as the speedy recovery of misappropriated funds. National Treasury should submit to Parliament a progress report within three month of the adoption of the report by the House.

10. References

Business Unity South Africa, BUSA Submission to the Standing and Select Committees On Finance Fiscal And Revenue Proposals For 2013, Cape Town, Parliament of RSA, 06 March 2013.

Federation of Unions South Africa, 2013 Budget submission to the Joint Standing and Select Committees on Finance, Cape Town, Parliament of RSA, dated 05 March 2013.

National Treasury, (2013), Medium Term Budget Policy Statement, Pretoria: Government Printers, also available online at: www.treasury.gov.za

Financial and Fiscal Commission, (2013), Briefing To The Standing And Select Committees of Finance On The 2013 Fiscal Frameworks And Revenue Proposals, Cape Town, Parliament of RSA, dated 05 March 2013.

Gordhan, P. (2013), National Annual Budget 2013’s Speech, Parliament of RSA, Cape Town, available online at: www.treasury.gov.za , dated 27 February 2013.

National Union of Mineworkers South Africa, (2013), NUMSA Response to the 2012/13 Budget, Cape Town, 05 March 2013.

Price Water House Coopers, (2013), Budget 2013 Tax Proposals, Cape Town, Parliament of RSA, dated 06 March 2013.

South African Institute of Chartered Accountants, (2013), Call for Comment: 2013 Tax Related Budget Proposals , Cape Town, Parliament of RSA, 05 March 2013

South African Institute of Chartered Accountants, SAICA’s Comments on the Fiscal Framework and Revenue Proposals, Cape Town, Parliament of RSA, dated 05 March 2013.

The Manufacturing Circle, (2013), Submission to the Standing and Select Committees on Finance on The Fiscal and Revenue Proposals and Documentation regarding the 2013 National Budget, 05 March 2013.

Report to be considered.