Chairperson, as we are debating these issues - for the third time to be precise - it becomes very difficult not to become repetitive. The Taxation Laws Amendment Bill and the Taxation Laws Second Amendment Bill are pieces of legislation that are dealt with annually and affect the Division of Revenue Act. As the Portfolio Committee on Finance we have deliberated to our satisfaction on the two Bills and thus seek the wisdom of the House to pass these Bills.
Taxation is one of the key distributive instruments that any government uses to allocate resources, especially to the poor. In our case, government is faced with the mammoth task of equitably distributing these resources. Our people's government also has to deal with the legacy of socioeconomic imbalances brought about by the previous racist minority regime under the cloak of a closed economy and projectionist trade policies.
As a vanguard of the people determined to better the lives of the masses, blacks in particular, the caring ANC has managed to resurrect the docile stagnant economy to its current robustness that has yielded over R490 billion in tax revenues. The ability to create a responsible citizenry that pays its dues is one of the cornerstones of a developmental state.
The ANC's deployment of visionary and disciplined cadres ensures that the interests and aspirations of the people are progressively realised. Therefore key strategic issues underpinning tax proposals to be effected by these pieces of legislation were tabled by the Minister earlier this year in his Budget Speech and they are: supporting economic growth, investment and job creation, business development and confidence; promoting financial security of households and reducing their vulnerability through retirement reforms that encourage savings; and supporting macroeconomic policy objectives.
I would like to single out just a few proposals from the strategic objectives mentioned above and the rest of the key proposals will be dealt with by my colleagues. I will start with section 11(d) of the Income Tax Act of 1962 that deals with tax incentives on research and development. Research and development are the cornerstones of socioeconomic development without which the poorest of the poor will remain on the peripheries of growth and development.
In order to achieve socioeconomic development goals, this section allows individuals and/or entities involved in research and development rebates of up to 150% of expenditure incurred for the purpose of scientific and technological research and development. It further enables depreciation of assets directly used for research and development. There are also adequate checks and balances to ensure that incentives are not abused by those who see these as a panacea for self-enrichment.
Being the month of the youth this incentive should pose a challenge to our youth to venture into the science field, knowing that they will be able to quench their thirst for knowledge with government fully behind them. Notwithstanding personal gain and advancement in this field, the youth will be the pride of the nation as they will be contributing immensely to the development and global competitiveness of the country in general.
Amendments to section 10 of the Income Tax Act of 1962 relaxes the conditions under which public benefit organisations can raise funds and also increase the threshold of taxable income for such entities. The threshold has been increased from R50 000 to R100 000 or 5% of the gross income of the PBOs. Further, companies and individuals who donate to these PBOs will be entitled to 10% of the taxable income. The threshold has been increased from 5%. The objective of this proposal is to encourage charitable contributions. In so doing the ANC-led government is indirectly enhancing and constructing values that will define cohesion, human solidarity and equity in society.
Lastly, the economy remains capitalist in character with a dual economic structure and huge inequalities inherited from the past. Black economic empowerment, and of recent times broad-based black economic empowerment, is the broader government strategy to deracialise the economy. Section 11 of the Income Tax Act of 1962 seeks to ensure that corporate reorganisations and black economic empowerment restructuring do not face additional tax costs that could undermine necessary financing, for instance sub clause (1)(b) limits the cost of property between the connected persons in order to prevent increases in costs for enhanced tax depreciation. However, are we building a caring society if black economic empowerment companies that have built strong balance sheets continue to benefit from the equity element of the score card? Thank you.