Hon Chairperson, hon members, this Bill forms part of the annual tax proposals announced by the Minister of Finance in the Budget Speech that was made earlier this year. Of course, these announcements are given effect to by Tax Bills tabled during the course of the year.
Inter alia, the Bill provides tax relief for individuals who pay income tax by adjustments to the personal income tax brackets. This partially accommodates for fiscal drag. The total relief provided for amounts to R7 billion. Although the personal income tax brackets were not fully adjusted for inflation in 2013-14, it should be noted that over the last decade and a half, personal income tax brackets have been adjusted above the annual rates of inflation, thereby, over the medium term, providing both for fiscal drag and real income relief.
The monetary amounts on the monthly medical tax credits are increased in line with inflation, thereby maintaining the real value of medical tax relief for individuals. The monthly tax credits will be increased from R230 to R242 for each of the first two beneficiaries, and from R154 to R162 for each additional beneficiary, with effect from 1 March 2013. These medical tax credits provide for a more equitable tax relief dispensation and make medical scheme membership more affordable for middle-income earners.
The Bill provides income tax relief for small businesses. The monetary brackets of the graduated income tax table for small business corporations were increased, and an additional lower 21% income bracket is introduced. In addition, the monetary annual turnover amount for a qualifying small business corporation is increased from R14 million to R20 million per annum.
The Bill also provides for increases in the monetary amounts of various specific indirect taxes. Tobacco excise duties are increased between 5,8% and 10%. Excise duties on alcoholic beverages are increased between 5,7% and 10%.
Amid the prevailing economic conditions and the daily struggles for survival by our people, it is our take, as the committee, that this Bill was well thought through and must be supported by all. Re a leboga. [We thank you.] [Applause.]
There was no debate.
Declarations of vote:
Hon Chairperson, indeed, as the previous speaker, our deputy chairperson, the hon Mr van Rooyen, has indicated, it is a fact that the Rates and Monetary Amounts and Amendment of Revenue Laws Bill is an annual Bill that gives effect to the tax proposals in the Budget. The good news, Minister, is that we acknowledge that there were generous concessions this year.
While National Treasury was indeed generous this year in tax bracket and rates adjustments, especially for small business taxation, in general, there were three main types of taxes where brackets were not adjusted fully for inflation. It is in these thresholds and brackets that several important taxes were not adjusted for inflation. This means that there was bracket creep, or, in real terms, increases in taxes - or if I may put it differently, decreases in the tax breaks for various groups.
If I may, I will give you the example, sir, of personal income tax. Inflation for 2012 was just below 6% but in thresholds it was only adjusted for 3,5%, meaning real tax increases of 2,5%; the turnover tax for micro businesses has not been adjusted since 2009; and taxable income for nominal retirement withdrawals was not adjusted for 2013.
The Bill provides tax relief for individual income taxpayers by adjustments to the personal income tax brackets, partially accommodating for the fiscal drag. That is the position where individuals move into a higher income tax bracket due to inflationary adjustments to their wages and salaries.
The second category is with regard to retirement lump sum benefits. This is a different story completely. The tax tables, although slightly adjusted on an ad hoc basis, have not been adjusted for inflation in 2013. We propose that the schedule should be adjusted annually in the same manner that the normal taxes are adjusted.
The upper thresholds have also not been adjusted - only a single 5% increase since 2009. National Treasury stated no policy reason - especially in the lower threshold groups - why retirees should not be subjected to increasingly harsher tax measures than the general taxpaying population. We have not heard sound reasoning why normal tax rates should be adjusted for inflation but not for the retirement lump sum withdrawal rates.
I think this morning we spoke to Prof Osman Mollagee of PricewaterhouseCoopers and he indicated the importance of savings for the public of South Africa and for them to have the maximum return on their investments.
Turnover tax adjusted for micro businesses has not been adjusted since 2009, thereby excluding a greater number of micro businesses every year. The threshold here is also problematic. It is inadequate, since businesses would have to generate over R108 000 in profit from a R100 million turnover a year. This is, of course, a tax on turnover. The thresholds need to be adjusted annually for inflation.
The DA supports the view that the Tax Review Committee will have a look at this Bill, but, unfortunately, we cannot support this Bill. Thank you. [Time expired.]
Chair, we rise to say that we shall support this Bill. It's not easy to sit on this side in support when you raise taxes, but there are also enough tax breaks in this. Therefore, let us remind ourselves that we need to spend South Africans' hard-earned money in the correct manner. Thank you. [Applause.]
Chairperson, as we have heard from other hon members, this is a consequential Bill. It is human nature to welcome tax relief and to oppose increases. However, one has to strike a balance. As it is said, "What one wins on the swings, he loses on the roundabout".
However, tax collection in South Africa, from all the reports that we have received, is excellent. More and more people are registering as taxpayers. It is indeed a very good sign that the citizens of South Africa are recognising their moral and civic responsibility.
I can declare that I am up to date with my taxes. I completed my returns last week. I want to complement the SA Revenue Service, Sars, on the excellent service that they offer us in Parliament. The VIP unit that we have can be compared with the best in the world.
Finally, in addition to what the hon Koornhof has said, the big question about tax collection is how the money is spent. Citizens would like to see value for money. Unfortunately, up to now, when we read the reports of the Auditor-General and other reports, we do not find that for every R1 of taxpayers' money collected we are getting R1 spent on the ground. This is an area that Treasury, Sars and all of us as parliamentarians must look into, so that when taxpayers pay their taxes, they know that they are getting a return, not only for them but also for the people of South Africa. Thank you. [Applause.]
Chairperson, there are two issues in question right now, which makes the DA not support the Rates and Monetary Amounts and Amendment of Revenue Laws Bill. I need to make it clear that it is about the adjustments for inflation and the retirement fund lump-sum withdrawal.
With regard to the adjustments for inflation, as ANC government we have made such adjustments since 2009. The problem is that the adjustment made is not according to the percentage as determined by the DA, but according to the needs of the country. That is where the problem lies.
I now come to the retirement fund lump sum withdrawal and the amendments that we are making today. If you remember, we raised them in 2009 when we said that if you want to withdraw from the R22 000 of the retirement fund, such a withdrawal will be a nontaxable amount. With this amendment we are proposing that this withdrawal must be from R315 000. We are talking here about ordinary workers in the community. We are not talking about people who earn millions and billions. We are talking about people who will gain from these amendments - people who are going to say they can withdraw R315 000 without a tax. Nowhere in the Bill is there a section which says it is compulsory for you not to take your money out.
However, the Bill says that if you take an amount exceeding, for example, R650 000, you will then be taxed by 27%. What is wrong with that? We know that South Africans do not have a disciplined culture of saving. The government has to do something to make sure that our citizens are well taken care of, after having worked hard. The ANC will definitely support this Bill. Thank you. [Applause.]
Question put: That the Bill be read a first time.
Question agreed to (Democratic Alliance dissenting).
Bill accordingly read a first time.