Chairperson and hon members, good afternoon. Let me start with some good news. The Governor of the Reserve Bank has decreased interest rates by 0,5%. [Applause.] So, you can go and borrow some money if you can afford to pay it back. That is the key thing. Interestingly, the Reserve Bank also says that inflation is going to be fairly tame for the rest of this year and not expected to rise above 5% for next year, that food prices will remain fairly benign, and that the issue of growth is slightly less optimistic than what we have been talking about before, because now they say that the rest of this year might produce growth of 2,8%, whereas everybody else was talking about moving towards 3%.
Let me firstly thank the chair of the standing committee, Mr Mufamadi, and members from all of the parties for their participation and for their support. It looks like, although everyone has said how complex this legislation is, they all understood it well enough to come and speak here. So, that is a good sign. Am I right? [Laughter.] Let me also thank the members of the public and the various constituencies who made submissions to the committee and for the officials from Treasury and the SA Revenue Service, Sars, who processed these.
The issue of simplicity and complexity in tax legislation is a perennial one. It is one that we talk about every single time we get here, and even the Minister of Justice and Constitutional Development can't help us to simplify this legislation, I am afraid. The more complex, as I have explained many times, the tax schemes become to either evade or avoid tax - whatever you think is the right and more polite word - the more complex legislation becomes throughout the world. I am sure my colleagues from Treasury and Sars are listening carefully to work out ways of simplifying this complexity. Perhaps the one step is removing the administrative elements from tax legislation, which we now do in the Tax Administration Bill, so once that is processed, that will be the first major step towards simplifying tax legislation.
I am afraid that as long as there are stunts for pricing and there are all sorts of schemes that are developed by batteries of people far larger, both in terms of the resources that they have access to and the numbers that they can actually command, than governments anywhere else in the world, we are not going to be able to cure the problem of complex tax legislation.
Several of the hon members, and in particular hon Luyenge, has talked about the importance of collecting tax, of increasing the tax base, of ensuring that the state plays a key role in enhancing what we call our caring society. Those who, I am afraid, engage in evading tax and who deliberately use avoidance techniques as well don't help us in this particular respect. Much of the complexity in this legislation is, in fact, directed to them.
The hon George also referred to complexity and what we can do in this particular regard. I am not sure that we are required to spend millions of rands on a commission. Perhaps between Parliament and ourselves we can have more dialogue about tax policy issues and whether some new tweaking is required in respect of tax policies. So, I make that offer that we have a workshop of some sort where contributions from each of us will, I am sure, add some value in this regard. You say that you are awaiting reports from us on procurement and other issues. There is good progress being made in that particular regard.
However, where you are wrong, hon George, is that transfer pricing is not related to the corporate tax regime. Transfer pricing is, in the context of globalisation, in the context of distributive production and operations of multinational companies, a feature that will grow increasingly. These are arbitrage opportunities that companies around the world have, which they utilise, and the world, through the tax administration and tax policy side, is constantly upgrading, if you like, the tools that it has in order to make sure that the country concerned doesn't actually lose money. What we see in the Act at the moment is in fact an attempt to once again up the stakes, if you like, in terms of transfer pricing by introducing new criteria which would assist in stemming the flow of monies lost to the fiscus.
The hon Koornhof - I am not sure if the headline should read: Cope wants higher fuel levies. It sounded like that a little bit, but I understand where you are coming from, that you actually want to redirect some of the fuel levies to regional roads. Thank you for that idea. The Tobin tax is perhaps one of those things we could debate when we have this workshop that I am talking about. You accurately described the balance between creating jobs, more taxation and some cuts in expenditure, and that is what our fiscal framework attempts to do. It attempts to create that balance between taxation, expenditure and borrowing, in particular.
The hon Oriani-Ambrosini has been invited by the hon Van Rooyen to committee meetings, it looks like, to raise some of the issues that he has, but once again he never fails to entertain us with the latest thoughts that he's actually had, and we thank him for his contributions in that regard. The same answers that I've given until now about simplification on tax legislation apply to him as well.
The one we need to be careful of, as we talk about simplicity, is that we do not create an environment - in this instance and something that other colleagues have mentioned as well - of being part of the race to the bottom. When we talk about foreign companies investing in South Africa, when we open up new regimes for headquarters to be established in this country as well, we should not compete in a way in which we want to beat everybody else and in the end, when we turn around, we find that we have nothing in our pockets. That is what the race to the bottom is about at this point in time. So, at some stage we will have to ask ourselves what would be in our national interest and where the limit would be where we would go to in order protect our own tax base as well.
I think the hon Oriani-Ambrosini needs to also, perhaps, visit the Treasury, let alone the committee, in order to enable us to give him some evidence about the connection between carbon tax and behaviour. That connection is certainly there, and we will want to make it available to him.
I want to thank the hon Dubazana for her contribution and her plea to us to make sure that the tax system links to our aspirations to build a developmental state, to support the growth path and to support the creation of jobs and growth in South Africa, as well.
The hon Swart also makes the plea about complexity. I have given the answer to that. Thank you for your support for the voluntary disclosure regime, and you asked me to commit myself on the budget deficit. I hope, like you, that it will be lower as well, but 27 October is around the corner. Let's wait for that date, and we will all know what it might look like for the foreseeable future.
Let me thank the hon Van Rooyen for his excellent research into mining royalties, the importance of co-ordinating various aspects of tax policy, and for his insight into the link between mining, industrialisation and the beneficiation processes. Of course, our challenge in South Africa is to stop talking about some of these things and attempt to concretely do the things that will enable us to create jobs and grow the economy. Once again, thank you to all of the parties for their support and for their participation in this process. [Applause.]
Debate concluded.
Taxation Laws Amendment Bill read a first time.
Voluntary Disclosure Programme and Taxation Laws Second Amendment Bill read a second time.