Hon Speaker, last week our sovereign debt rating was downgraded again. The primary reason is our low growth prospects resulting from structural weaknesses in our economy. One more downgrade will place us on the verge of junk status, where institutional investors cannot invest in our economy because their mandates will not allow them. This is an extremely serious state of affairs and there must be decisive action to avert the economic crisis that we can already see coming down the track.
The Taxation Laws Amendment Bill reflects government economic policy in the collection of revenue. The current macroeconomic picture is dismal. Expenditure exceeds revenue and the deficit continues to widen. Government has lost control over consumption expenditure and is unable to restrain it now.
The public sector wage bill continues its upward spiral without improvements to service delivery. This has resulted from the cadre deployment policy that places incapable politically connected cronies in senior positions at inflated salaries and bonuses.
The cost of social security continues to rise because our economy isn't growing and results in more people entering the social security net and few exiting. A stronger economy would result in fewer people in the social security net and enable government to provide more support to vulnerable members of our society than it does now.
Government has wasted billions of the people's money on failing state-owned enterprises that operate on the so-called corporatisation model. This enables deployed cadres to occupy senior positions, pay themselves hugely inflated salaries and not deliver - without any consequence. Eskom has recently demonstrated that a mismanaged state enterprise can literally collapse.
In addition, at least R30 billion leaks from the public financial system every year in the form of corrupt and fruitless and wasteful expenditure - without any consequence. Now that the money has run out, there is nowhere to hide. The Minister has already said that we face tax increases next year to fund this mismanagement of our economy.
The most significant implication of this Bill for individuals is in regard to retirement savings. Given that government has run out of the people's money to fund its mismanagement of our economy, there is no doubt that retirement fund cash cows will be considered a very lucrative source of additional revenue. This contradicts government's stated policy to encourage domestic savings and investment in our economy. We will oppose any attempt to tax hard-earned savings.
Changes to retirement fund tax policy cannot be done piecemeal. Government should clarify its position on social security reform before it rushes into changes that confuse and negatively influence the financial behaviour of retirement fund members. We look forward to more robust consultation before further changes are proposed, and the Minister should clarify what that process is.
Reducing the size of the bloated Cabinet, streamlining the economic Ministries and better financial management to curb wasteful spending would be a better solution to relieve the revenue shortfall.
The Minister has stated that government will increase its revenue from the sale of nonstrategic state assets. What are these assets and when will they be on the market?
The small business and entrepreneurial sectors must be supported to grow our economy. We welcome incentives for venture capital companies and expect far more to be done to encourage this activity. Given that we do not support the fiscal framework and do not support the incoherent economic policy that underlies it, the DA will not support the Taxation Laws Amendment Bill.
The looming economic crisis can be avoided if government climbs out of the ideological hole it has dug for itself, under the misguided belief that it can build a so-called developmental state, which it is obviously incapable of implementing. So this is unlikely, and there remains no political will to implement the National Development Plan either.
The Rates Bill sets out the tax rates for the current financial year. We agree that we must not balance the budget on the backs of the poor. Instead, we must balance it on the backs of the bloated Cabinet and rich deployed cadres who pay themselves enormous salaries and bonuses. [Applause.] We must balance it on the backs of those who waste and steal the people's money without consequence.
In our alternative budget, the DA set out our policy on growing small business. In particular we proposed cash flow assistance through the introduction of a three-year tax loss carry-back for businesses with a turnover of less than R5 million. We also proposed that a tax credit that derives from an assessed loss can be offset against tax payable.
The Bill before us does not even try to address the reality that small business cannot grow without a conducive tax dispensation. The tax rate on small business is too high. The Bill can and should do more to accelerate our economic growth and we will not support it.
The Tax Administration Laws were enacted to govern the relationship between the SA Revenue Service and taxpayers. When a taxpayer disputes with Sars, there is an initial internal process of 36 business days. That is too long. We welcome the removal of the relevant material requirement that has complicated the tax clearance process.
To enable small business to flourish, Sars should establish a dedicated small business centre and amend section 190 on audit provisions. There is no timeline for Sars to complete an audit and this can bankrupt a small business dependent on steady cash flow.
The Bill does not sufficiently balance the tax relationship, especially for small business, and we will not support it. Thank you, Speaker. [Applause.]