Chairperson, when the Minister of Finance tabled the Taxation Laws Amendment Bill in this House, he remarked that nobody seemed to be listening to his presentation. His observation points to the reality that many are disinterested in taxation laws because they do not find them to be particularly exciting or easy to understand.
Taxation is, however, the single largest intervention that a government can make in an economy. Tax policy influences economic behaviour, directs scarce financial resources from one part of an economy to another, and has a significant impact on the lives of the people who rely on the tax redistribution system to improve their circumstances.
The taxation laws before us give effect to the revenue proposals announced in the February 2010 Budget and amend 13 different Acts. When the former President signed the Money Bills Amendment and Related Matters Act into law in April last year, the budget process changed significantly.
Parliament now first approves a fiscal framework and revenue proposals, then the tax laws are drafted and a process of public consultation is activated. In theory, Parliament can amend the proposed tax laws before they are enacted. The problem, however, is that the fiscal framework has already been approved and any substantial deviation from revenue proposals could affect national income and thus change the variables on the fiscal framework. To avoid this, taxation amendments should be considered before the fiscal framework is approved.
The Money Bills Amendment and Related Matters Act was passed after several years in the making to provide Parliament with an opportunity to demonstrate that it is, in fact, an active Parliament and that it will exercise its power to amend the proposed Budget to the benefit of all South Africans.
Almost a year and a half after the enabling legislation was enacted, the parliamentary budget office is still not established. On 17 August 2010 the Chief Whip of the DA wrote to the Speaker requesting a meeting to discuss progress on the establishment of the office. The Speaker responded that a report from the team tasked with implementing the Act would be tabled in Parliament within two weeks. Those two weeks have passed.
Although the parliamentary budget office is an important support mechanism for Parliament in its amendment of money Bills, the work of Parliament does not need to be delayed in its absence. The chairman of the Standing Committee on Finance, hon Mufamadi, has initiated a process to place the matter of the VAT treatment of books on the committee agenda so that it can consider whether a formal request will be made to National Treasury to include a zero rating in its development of the budget for the next financial year.
We welcome this development and thank the chairman for progressing this matter that will have a significant and positive impact on improving access to reading material for all South Africans, especially young readers whose thirst for knowledge is severely hampered by empty school library bookshelves and students who are subsidised to study and yet pay tax on the prescribed books that they need to purchase to ensure success in their examinations and ultimate qualification. The DA looks forward to progress on this in the near future.
The DA also welcomes the voluntary disclosure programme that will run from 1 November 2010 to 31 October 2011 to grant relief to taxpayers who disclose defaults which the SA Revenue Service was not aware of. This will ensure that errant taxpayers are permitted to return to their respectable position within the tax net. An opportunity also arises for the so-called informal economy to be included in the calculation of the size of our economy and to contribute to the society that generates its income.
The 2009 tax statistics reveal that 5,5 million individual taxpayers, from a total population fast approaching 50 million, contributed 31,2% of tax revenue. This is a significant contribution by a relatively small portion of our population. The DA does not welcome the increase in the general fuel levy and the one for the Road Accident Fund. We believe that government should not be increasing the tax burden when it has not made any significant progress in plugging the gaping holes in the application of the people's money. The procurement process is highly inefficient at best, and at worst riddled with corruption. The tender default register remains empty and we await progress following the preliminary report on 27 October 2009 of the government task team to affect saving.
We also await progress on the implementation of the wage subsidy, the introduction of a poverty line index, progress on reducing the size of the administration bureaucracy and increasing the number of teachers, nurses and policemen who serve at the coalface of service delivery. The recent public sector strike, currently on hold, demonstrated the wide disparities in compensation between different classes of public servants.
The taxation laws include a number of amendments to tax on individuals, including partial compensation for fiscal drag. The DA believes that it is possible to offer taxpayers more comprehensive relief from the impact of inflation on their disposable income and greater incentives to save through higher tax-free thresholds on interest-bearing cash investments.
The DA supports the ideal of a lower carbon footprint and believes that incentives are required to encourage economic behaviour which is beneficial to our environment. Our concern that the flat rate carbon emission tax on new vehicles was implemented in isolation from a broader strategy to lower the carbon emissions from all sources in our economy has been addressed. Given that consumers do have a choice to purchase lower emission vehicles, we do not oppose the tax and believe that it will encourage the desired consumer behaviour.
Some motor dealers have falsely advertised that the tax is applicable to all new passenger vehicles to boost their sales. New passenger vehicles that emit less than 120g per kilometre will not be subject to the tax. Although measures have been taken to counter tax arbitrage facilitated through transfer pricing, this risk will always exist while our corporate tax regime is higher than that offered in other more attractive jurisdictions.
Although participation in a race to the bottom in terms of corporate tax is not constructive, National Treasury should continually work towards a lower tax regime that will attract taxpayers into our tax net. The micro business turnover tax should be redesigned, given that it has proved to be unattractive to its target market.
The committee has raised with National Treasury our concern that the tax laws are becoming increasingly complex and complicated and that their simplification should be considered. Treasury has responded that improvements are being made where possible, but that oversimplification can result in unintended distortions to the detriment of particular taxpayers.
The DA remains convinced that a tax commission is required to formally consider how a suitable balance between simplicity and comprehensiveness can be achieved, and we look forward to the result. There was broad consultation during the parliamentary hearings and the willingness of the National Treasury to interact with various stakeholders is noted with thanks. The DA will support the Bills.