Racial divisions rocked the latest financial hearing on taxation for the future, reports Lynda Loxton
The wide economic divide that still separates blacks and whites in this country was highlighted during this week’s parliamentary joint committee on finance hearings into the Katz Commission’s proposals on taxation.
On the one hand, there were the multi-billion rand insurance companies pleading for the idea of a tax on their profits to be scrapped or the poor would suffer because they would not be able to fund the Reconstruction and Development Programme. Big business called for government spending cuts and better tax
On the other hand, there was Cosatu angrily denouncing Michael Katz for trying to ease the tax burden on the rich while making the poor pay even more, and black business saying the tax amnesty in its present form was unworkable because blacks feared retribution despite the fact that they had obeyed past calls not to pay taxes to the apartheid government.
The committee is going to have a difficult time reconciling these different demands, especially with the commission dangling the promise of billions-of-rands in extra revenue should its proposals be accepted.
Their job will not be made easier by the fact that the commission came under fire from just about everybody for different reasons about the basis for their conclusions, their calculations on new revenue collections and the effect of their proposals on the economy.
Perhaps the most controversial issues were the planned 30% tax on the income of pension funds, which was attacked by almost everyone, and the retention and possible increase in value-added tax.
The commissioners launched a spirited defence of their work, arguing that each interest group was looking at the proposals only in terms of their own interests and not in terms of what was good for the nation as a whole.
Cosatu made a vital point: Tax concerns us all, and few, if any, actually enjoy paying it. But if most South Africans don’t understand what the Katz Commission and, eventually, government, is trying to do to the tax system, it generally won’t.
Cosatu’s submission on the commission’s proposals was presented to the committee as it sat down to hear its views, giving them no chance to read it beforehand.
It apologised, but said that a major handicap had been the “unnecessarily complex and inaccessible style used by the commission in presenting its findings.
“It is of great concern to us that the commission seems to be under the impression that the task of restructuring our tax system is the exclusive preserve of tax experts and business technocrats,” Cosatu said.
“This seriously underestimates the sensitivity with which the majority of South Africans view the question of taxation, and the need for the tax system to be aligned to the tasks of transformation of our country.”
It could be argued that more people should be involved in making tax laws, but whether that will make them any easier for all to understand is another question.
The committee will meet behind closed doors to make its final recommendations to the government, within the next week. Expect some fireworks ahead!