We have given due consideration to this and the debate today, hon Harris, has reflected concerns about both the submissions and perceived omissions. Amongst other things, the move to convert additional medical expenses to medical tax credit came under a lot of scrutiny during public submissions. There were those who felt that by removing the unlimited medical deduction and the static interest exemption, they were being dealt a double blow.
The reality as it emerged from our deliberation is that the vast majority of taxpayers, particularly those who fall in the income tax bracket below 70%, will be better off. I must indicate, hon Speaker, that only taxpayers who are taxed at the rate exceeding 33,3% will receive less relief. More importantly, the relief will be more equitable and the marginal benefit will no longer be linked to income. This amendment, hon members, will enhance the progressive nature of our tax system.
In addition, there was the view that people with disabilities and taxpayers aged 65 and older are particularly vulnerable and have less control than other individuals over medical costs, especially out-of-pocket expenses. In line with our principle of caring for the most vulnerable sectors of our society, this Bill, hon Harris, as an indication that we have listened to the submissions made, proposes changes regarding out-of-pocket expenses that will only take effect in the 2015 tax year. Moreover, only taxpayers taxed at a rate exceeding 33,3% will be negatively affected. The concern that the proposed medical credit will not benefit taxpayers falling below the tax threshold, because the credit is not refundable, is dealt with, appropriately and thoroughly, by the public health system which benefits those below the income tax threshold.
Whilst as a committee - I reiterate - we accept the proposal that the definition of variable remuneration must be extended to include other sources of income so as to eliminate identified payroll intricacies, we have agreed that the proposed amendment in respect of variable remuneration must be extended to ease some of the common difficulties that employers are experiencing in respect of the employees' tax. We have not accepted a generic description because our belief is that this could extend the regime to unintended items and, of course, this might create space for noncompliance and avoidance, and this might undermine our collection efforts.
Hon Speaker and the House, contrary to the existing legislation that allows for the transfer of insurance policies by an employer to an approved retirement fund to be taxed, the Bill is bringing to light an amendment that will allow for such a transfer not to be taxed - what a relief, hon Harris.
In addition, as we have all alluded to, we have deliberately made amendments in the draft Bill that relate to business tax and, in particular, our financial institutions, with reference to specific products that have to do with marketing as well as incentives as they relate to specific projects like learnerships and government subsidies. We dealt with our responsibility in relation international practice and taxation as cited by our chairperson. We, as a committee, also think that this will ensure that our tax system remains globally competitive. All of us know that it is a prerequisite for participating in the global market.
Finally, and of importance to this House, we agreed to exempt from value- added tax, as it relates to relief for political parties - I must expand on this as instructed by my chairperson - membership income and donations made to political parties as from the next financial year. This amendment is Inter alia, intended to encourage support for political parties, in order to bolster our constitutional democracy. We need strong political parties.
Hon members, it is a norm that tax policy will always be challenged at a time when draft tax legislation is being deliberated upon. So, the temptations are very high. Temptations are normally high to promote individual and sector interests, and hence you find some of our members agreeing with us in the committees but when they come here they play to the gallery. It is not surprising; the stakes are very high. However, what is our role as parliamentarians? Our role as parliamentarians is to create a balance between shallow sectoral interests and far-sighted national interests. This role becomes extremely important at this juncture. At the centre of our mandate is the need to ensure that our policy-making processes prioritise national interests at the expense of any other myopic ambition - please, hon Harris.
We do not begin to adopt an approach that entrusts the market with policy determination. It is our domain; we cannot be seen outsourcing it to the market. It is our domain, as Members of Parliament. The consequence of outsourcing it will lead to great instability to which markets are prone. The world is in an economic mess at the moment, because the markets were allowed to determine policy. [Interjections.] We cannot allow this to happen.
Hon Speaker, for all considered reasons cited - forget about the hogwash that was cited by other members - the ANC supports these amending Bills. Ke a leboga. [Thank you.]