ATC241203: Report of the Select Committee on Finance on the Rates and Monetary Amounts Amendment Bill [B15 - 2024] (National Assembly- section 77), dated 03 December 2024
NCOP Finance
Report of the Select Committee on Finance on the Rates and Monetary Amounts Amendment Bill [B15 - 2024] (National Assembly- section 77), dated 03 December 2024
1.Introduction and background
Section 77 of the Constitution requires all money Bills to be considered by a procedure for passing revenue Bills established by the Money Bills Amendment Procedure and Related Matters Act, 2009 (Money Bills Act). Section 11 (4) of the Money Bills Act requires the Committee to hold public hearings on the revenue Bills and report to the House.
The Rates and Monetary Amounts Amendment Bill (Rates Bill) was formally tabled on 30 October 2024. The Bill contains tax announcements made in the February 2024 Budget. The proposed amendments in the Bill seek to increase the excise duties on alcohol and tobacco and the rate of carbon tax. The objective of the Bill is to amend the Customs and Excise Act, 1964 and the Carbon Tax Act, 2019, to consider these proposals.
On 20 November 2024, the Select Committee of Finance (SeCoF) received a briefing from the National Treasury (NT) and the South African Revenue Service (SARS). Despite calling for public comments, the Committee received no submissions on the 2024 Rates Bill. The Committee held a meeting on 29 November 2024 and 03 December 2024 to consider the Bill clause by clause and adopt the report, respectively.
2.Proposed amendments in the 2024 Rates Bill
In the 2024 Budget Review, the government proposed to increase taxes by a total of R15 billion in 2024/25, to alleviate immediate fiscal pressures and support faster debt stabilisation. The proposals include increasing excise duties on alcohol by between 6.7 and 7.2 per cent and duties on certain tobacco products by between 4.7 and 8.2 per cent in 2024/25.
In this tax legislative cycle, the government decided to not adjust tax brackets, rebates, and medical tax credits for inflation, to increase Personal Income Tax (PIT). The fuel levies will also not be increased, resulting in R4 billion in tax foregone, while the Road Accident Fund (RAF) and the customs and excise levies will also remain unchanged (2024 Budget Review).
3.Committee observations and recommendations
3.1The Committee welcomes the proposed changes in the excise duties on alcohol and tobacco and believes that if applied consistently and in a balanced manner, tax can make alcohol and tobacco products progressively less affordable. The Committee, however, expresses its concern about the unintended consequences of these increases, in that they might serve to increase the space for illicit trade market to grow.
3.2The Committee welcomes SARS continuous interventions in addressing illicit trade and notes the explanation it provided that illicit trade is a criminal matter, which requires a multifaceted, coordinated approach by all involved. The Committee urges NT, SARS and other relevant stakeholders to intensify efforts to combat illicit trade.
3.3The Committee reiterates the recommendation made in its revised 2024 and 2025 proposed fiscal framework report that SARS should be allocated additional resources to enhance digital capacity, retain critical skills, and encourage tax compliance. The additional funding should also strengthen tax administration and combat illicit alcohol and tobacco trade.
The Select Committee on Finance, having considered and examined the Rates and Monetary Amounts and Amendment of Revenue Laws Bill [B15 - 2024] (National Assembly – section 77), referred to it, and classified by the JTM as a Money Bill, accepts the Bill.
Report to be considered.