Hon Chairperson, the Taxation Laws Amendment Bill, Bill 28 of 2010, is a money Bill according to section 77 of the Constitution and contains changes to total tax liabilities as a result of changes to the tax rates and/or tax bases.
Taxation in the South African economy is crucial to our fiscal sovereignty, and our ability to fund government through tax revenue. The Bill gives effect to the tax proposals announced in February 2010 by the hon Minister of Finance when the Budget was tabled. Hon De Beer, I want to refer you to the Budget Speech of the Minister as well as to the review of last year's Medium-Term Budget Policy Statement, MTBPS. Go and read it, and there you'll find the answer to the problem that you addressed this afternoon.
Among the aspects that the Bill addresses are those that contribute to the economic growth value chain, such as individual and business taxpayers' saving mechanisms and employment. These will have to be welcomed and recommended as they will both directly and indirectly contribute to the achievement of government's priority goals, in particular the creation of decent work and sustainable livelihoods.
Tax evasion and avoidance is not only a crime but also a basis for building a culture of corruption in our society, which we must counteract. It is also to the credit of our democratic parliamentary processes that a number of changes have been made to some of these original proposals as a result of comments and inputs that were received.
The proposed Bill provides for personal income tax relief and closes various tax loopholes to ensure an equitable tax system. In the main, the Bill's proposals seek to do the following: to tighten the rules relating to employer-provided motor vehicles with the aim of preventing arbitrage; to promote uniformity and avoid duplication in the implementation of the retirement and preretirement withdrawal benefits by making the employer- provided lump sum termination payout part of the tax-preferred calculation; to narrow the permissible instruments in the implementation of the interest exemption threshold and review its effectiveness as an incentive intended to promote savings by middle- and lower-income households; to place certain Sharice-compliant products on an equal tax footing with conventional finance products; and to close loopholes relating to financial institutions that deduct beyond what should be equitably allowed for by the basic tax principles when implementing laws dealing with interest expense allocations.
Amendments are also proposed in the Bill with regard to refinements to the mineral royalty legislation. The South African mineral and petroleum royalty system imposes an increasing or decreasing rate, depending on the company's profitability. This varying rate allows for South Africa, as a whole, to enjoy relatively higher yields during boom years while providing partial relief during lean years.
These changes will also help in establishing co-ordination between the implementation of the Mineral and Petroleum Resources Royalty Act and other taxation laws. This taxation is important for increasing our tax base. That's very important. Changes that are being introduced will assist in the promotion of beneficiation and thereby propel us to greater heights in terms of industrialisation, economic growth and employment creation.
South Africa's tax treaty network makes South Africa an ideal location for foreign investors to base the management of their regional operations. The proposed amendments eliminate tax hurdles so that foreign investors can utilise South Africa as a launching point and for various regional equity fund investments.
The Bill gives effect to the tax proposals announced in February 2010 when the 2010-11 Budget was tabled.
The Select Committee on Finance supports the Taxation Laws Amendment Bill, Bill 28 of 2010, and calls on the House to support the Bill. I thank you. [Applause.]
Debate concluded.
Bill agreed to in accordance with section 75 of the Constitution.