Madam Deputy Speaker, hon members, in 1955, at the launch of the document called the Freedom Charter, when South Africans from all walks of life pronounced that the wealth of our country shall be shared amongst those who live in it, a few understood the positive effects of this assertion as it rang in their ears. For the apartheid regime, this sounded terroristic. The only solution to this rhetoric was detention, banishment, imprisonment and elimination in some cases.
Today, as South Africans and in unison, we need to congratulate our thoughtful and visionary forebears who gave birth to this empowering instrument of our democracy. We cannot fail to express this gratitude as we look into this Bill amending the revenue laws. Our tax policy, since the dawn of democracy, has been very instrumental in shaping and putting into reality this ideal that all shall have equal access to land, wealth and other resources within our country.
Many argue that tax has never been a good redistributive tool to address major issues such as poverty, the imbalances of wealth, access to education, provision of health, reducing crime, promoting equality and effective development. However, the South African tax policy is one example of a system that promotes all those, particularly equal distribution of resources, development and the growth of our economy.
Minister Manuel, in the Medium-Term Budget Policy Statement of 2008, strongly and correctly stated that government has been able to reinforce the progressive character of our tax system. It is against this background that the ANC welcomes the proposals as made in the Bill. In terms of these proposals, small businesses are able to register for presumptive taxes. This proposal recognises the massive impact that can be made by small businesses in reducing poverty, creating jobs and in their potential to grow the economy.
Sars concluded a process of amnesty and tax registration for small businesses last year - an effort which is to be appreciated and an effort that has contributed to our booming economy today. This current proposal, therefore, affords small businesses that have an annual turnover of R1 million an opportunity to be exempted from paying multiple taxes with the view of reducing tax liabilities that might eventually result in the collapse of their businesses. In this case, small businesses shall have the choice to register for this tax, which is a stand-alone tax and replaces the Capital Gains Tax, Secondary Taxes on Companies and Value-added Tax for companies that are registered under it. Companies can also deregister as they outgrow the R1 million turnover bracket. This is important because the tax acts as a relief measure for deserving businesses but not as a trap for businesses within this category.
A specific clause has been added to deal with tax avoidance at this level, and exclusion applies to certain groups as identified in the legislation, such as personal service providers, professional services and businesses with interests in other companies.
There are other proposals that are made within the Bill which will encourage job creation and skills development. These proposals provide for the relief of apprenticeships registered under the Manpower Training Act in terms of which the minimum period of learnerships or internships is more than 12 months. The proposals seek to treat these multiyear learnerships as a series of annual learnerships. These proposals will apply to pre-existing employees, new employees and disabled employees. The proposals will in fact allow the employer to claim about two deductions in a year for each year of apprenticeship.
Attached to these proposals is a reporting mechanism that serves as a requirement for monitoring purposes on the overall progress of this apprenticeship or learnership. Companies must therefore submit reports to Setas which will further be aggregated to the National Treasury to determine their viability.
In terms of low-cost housing, the Minister has explained in detail the benefits of this relief. It is very important to highlight that there are inherent risks that exist within the property market. The construction and provision of low-cost houses is also a challenge for government within the current scenario. While government has many outreach programmes, we have to appreciate that a supportive tax environment will be beneficial to these proposals.
A simple and comprehensive regime is needed for easier compliance and monitoring. In this case, buildings and apartments trading as hotels are excluded from the definition of residential units and low-cost residential units which are introduced in these proposals. For example, for a house to qualify as a low-cost residential unit, its cost must not exceed R250 000, and the owner must not charge rental above a percentage of that cost. The monthly rental charge that is referred to above can be increased up to 10% per annum at a cumulative cost. For example, if you built a house worth about R250 000, you must be charging about 1% by 2011 to qualify for this proposal. In this case, by 2012 you will have to charge about 1% plus 10% of the cost of the same house that you built at R250 000. By 2013, the value of the rental will be about R3 025, which is about 1% plus 10%, and the house will be worth about R275 000 at the time. [Interjections.]
The ANC supports the amendment. Thank you. 7[Time expired.] [Applause.]