Thank you, Chairperson and hon members. Chairperson, I hope you noticed that the secretary defied you when you asked her to read the Bill. She didn't read the Bill, but she just read its name. So, there is something wrong on the papers.
The imposition of an export levy on rough diamonds is contained in current legislation. In fact, the Diamond Act of 1986 contained this provision. However, given our new constitutional dispensation, amendments to that Act of 1986 during 2005, resulted in the need for amendment supervisions relating to the export levy on rough diamonds, hence a need a for a separate Money Bill.
Early in the House, Chair, you recognised the presence of the leader of the Indian Congress Party, the hon Sonia Ghandi. She shared with us this morning that India is a country that employs a few millions of people in the cutting and polishing of diamonds, though they haven't countries that have any diamond resources of their own. She was said that the Indian government is very committed to ensuring that countries like South Africa, that have considerable diamond resources, will also be able to create employment in the cutting and polishing.
I think, it is very important that we understand the context of the legislation before us. Part of what we want to do is to ensure that there is sufficient rough that remains in this country as a source of employment and also for value addition. It is essentially that the levy must facilitate and make people who want export rough, should pay. At the same time, the primary legislation will ensure that those who want to cut and polish in South Africa would be benefited. That is essentially what the Money Bill sets out to be.
There are a number of relief measures or exemptions covered in the legislation: Firstly, relief for large producers; secondly for medium sized producers, the relief there would be if 15% of the producer's total annual growth sale is to local diamond beneficiates; and thirdly, some exemptions for small producers who don't exceed R20 million a year.
The purpose of the export levy is of primary regulatory in nature. The import credit and exemption may be limited in order to raise revenue if deemed necessary. At this time we see no need for this limitation because the new regulator and all related admin expenses are being fully funded on the budget. The historical context of the local diamond industry and the nature of how the local diamond market players operate, indicate that there is a higher set of local beneficiation requirements on large producers.
Lastly, the diamond Export Levy will not be deductible for income tax purposes. It is clear that the export levy can be avoided in full if producers meet the necessary requirements to supply local cutters and polishers. Hence, the levy effectively acts as a penalty where producers fail to meet these local supplier requirements. It is, therefore, reasonable to argue that given its penalty nature, this levy should not be considered as being deductible expenses for income tax purposes.
I raised that here because somehow one of the journalists got it wrong and reported that this would be deductible; but clearly it would be contrary to the letter and spirit of the Diamond Export Levy Bill itself. Chairperson, I, hereby, request that this House supports the Diamond Export Levy Bill, 2007. Again, I want to express my appreciation to the usual suspects, starting with the distinguished Chairperson of the portfolio committee, its members and those involved in the Treasury - in the preparation of this legislation. I thank you.