Mr Speaker, we have two Bills before us today because the annual Bill to amend the tax laws was split into the Tax Laws Amendment Bill, which is a money Bill, and the Tax Administration Amendment Bill, which contains the policy clauses. They do not actually impose or amend actual taxes. So together these two Bills amend at least 13 separate pieces of legislation that are enormously complex and the chairperson has asked us to give you some detail from the Bills. So let me do that.
Amongst other things, the Taxation Laws Amendment Bill provides for the conversion of additional medical expenses to medical tax credits, and introduces retirement reforms and a new system of taxing real estate investment trusts.
The DA's main concern with the Tax Laws Amendment Bill is that Treasury had to issue a substantially revised version of the Bill in July, after unintended consequences were identified in the version released in March. The revised version closes a loophole in the change from secondary tax on companies, STC, to dividends tax, which until the Bill was amended by Treasury at the last minute, could have cost South Africa around R3 billion in lost tax revenue. Following these revisions, there is now a significant tax preference for derivatives over equity holdings. So clearly, it seems to us Treasury has started to become a little too hasty in tabling ambitious draft tax legislation.
Generally, there seems to be a tendency to pass the law and fix it later, but there is a problem with this. Despite the generous consultation processes around the Tax Bills, they continue to have significant errors when they get released and our businesses need to operate in this environment. They need to know what is coming down the line in terms of tax proposals. Increasingly, there is uncertainty around whether the proposals tabled by Treasury earlier in the year might be changed later in the year. This has a risk of potentially damaging the reputation of the SA Revenue Service, the Sars, and Treasury concerning transparency and predictability in a tax environment. So that is our major concern about the Taxation Laws Amendment Bill.
Regarding the Tax Administration Amendment Bill, this Bill sets out to introduce or begin to introduce a regulatory framework for tax practitioners. Currently, the framework is relatively light touch. So it requires practitioners simply to be members of a controlling body, which maintains qualification and ethical requirements.
The DA had several concerns with regard to this Bill. All of them were raised by one or more presenters in the public hearings. Firstly, was the concern that provisions in the Bill that apply to tax practitioners should also apply to Sars officials. It simply makes sense that the taxman should have to comply with the same qualification and the regulatory criteria in respect of their competence as tax advisers. This proposal was firmly rejected by the committee. So we left with something of a double standard, which is a great disappointment to us.
Secondly, because we are now beginning to subject tax practitioners to a regulatory framework, it seems obvious that we should have tackled the issue of statutory privilege for tax advice from tax advisers. Buttressed by defensive arguments by Sars, the committee rejected this proposal. The committee said they will rather revisit it again in a year and half's time. That was Sars' argument.
We do not think that it is acceptable. Nevertheless, the DA put forward a proposal in the committee that rather the addition of some kind of priviledge for tax practitioners should be considered by the committee itself instead of simply outsourcing to Sars. Nevertheless, it is disappointing that it is not taking place under this current review.
Thirdly, there was this purportedly reasonable request that the qualification requirements imposed on tax practitioners be tax-specific. Right now, they are general. One needs to be generally qualified not tax qualified. This is the problem, and our proposals to amend it were rejected by the committee.
Lastly, and this is the "one silver lining", we have 34 000 tax practitioners registered with Sars, but only 50% of them are registered with controlling bodies. So it was clear to the DA that we needed quite a long period for these controlling bodies to be able to sign up members. This is one small victory for the DA because the effective date for membership of a recognised controlling body was extended from 01 April to 01 July 2013.
Nevertheless, it might have something to do with the complexity of tax laws or National Treasury simply being used to getting their way on the tax laws, but there is a general resistance of the committee to accept perfectly reasonable suggestions. Because of this, while we support the Tax Laws Amendment Bill, we are unable to support the Tax Administration Bill. I thank you. [Applause.]