Rates Bill: adoption; SA Postbank Ltd Amendment Bill: discussion

Meeting report

The Chairperson welcomed everyone present at the meeting.

No apologies were received from the members.

The Chairperson sought clarity on the process

The Chairperson clarified that there are no amendments to the Bill. It will be straightforward. The Bill as tabled will be flighted. Once the Committee has concluded, the Report will be flighted and the same will have to be done.

The Chairperson asked National Treasury to lead the Committee through the Bill.

Rates and Monetary Amounts and Amendment of Revenue Laws Bill
Ms Yanga Mputa, Chief Director: Tax Policy Unit, National Treasury, took the Committee through the clauses.

Clause 1
Ms Mputa stated that clause 1 deals with the fixing of rates of normal tax as indicated in the budget.

Members agreed with the provision.

Clause 2
Ms Mputa stated that clause 2 deals with the general rebates, primary rebates, secondary rebates, and tertiary rebates as indicated in the budget.

Members agreed with the provision.

Clause 3
Ms Mputa stated that clause 3 deals with the medical checks credit. It is being changed based on the budget.

Members agreed with the provision.

Clause 4
Clause deals with the calculation of the cash equivalent of the value of the taxable fringe benefit for employer-provided housing.

Members agreed with the provision.

Clause 5
Clause 5 impacts the alcohol levy, tobacco levy, health promotion levy, plastic bag levy, and fuel levy.

Members agreed with the provision.

Clause 6
Ms Mputa stated that clause six deals with the Employment Tax Incentive.

Members agreed with the provision.

Clause 7
Ms Mputa stated that clause 7 impacts the Carbon Tax Act. Ms Mputa explained that the Rates Bill has the carbon tax rate from 1 January 2022. The Taxation Laws Amendment Bill (TLAB) has the rate trajectory over the years from 2023 until 2030. The rate reflected in the Rates Bill is for 1 January 2022.
Members agreed with the provision.

Clause 8

Ms Mputa indicated this clause also dealt with the carbon tax. That is the formula.

Members agreed with the provision.

Clauses 9 and 10
Ms Mputa explained that the Minister stated the corporate tax rate reduction in the budget for years of assessment ending 31 March 2023. This implies that all changes dealing with the corporate tax rate reduction should be included here.

Clauses 9 and 10 deal with the changes regarding the assessed loss restriction as well as section 23(m) limitation of interest deduction.

Members agreed with the provisions.

Clause 11
Clause 11 is the short title of the act.

Members agreed with the provision.

Voting on Bill
The Chairperson requested a move for the adoption of the Bill.

Mr G Skosana (ANC) moved for the adoption of the bill.

Ms P Abraham (ANC) seconded the adoption.

Dr D George (DA) reserved the position of the DA.

Committee Report on Rates Bill

The Chairperson took the Committee through the document. The Committee focused on paragraph 5, which dealt with its Observations and Recommendations.

The Committee agreed to paragraphs 5.1, 5.2, 5.3, 5.4, and 5.5 of the report with no changes or discussion.

The Chairperson requested a move for the adoption of the report.

Ms Abraham moved for the adoption of the report.

This was seconded by Ms M Mabiletsa (ANC).

Dr George reserved the position of the DA on the report.

The Chairperson indicated that the decision would be recorded.

South African Post Bank Limited Amendment Bill

The Chairperson noted that the Parliamentary Legal Advisor wanted to clarify how the Committee should process the Bill. It was a matter referred to the Committee by the Portfolio Committee on Communications and Digital Technologies.

Adv Frank Jenkins, Senior Parliamentary Legal Advisor, Constitutional and Legal Services Office, explained that the Bill is about making the Minister of Communications and Digital Technology a shareholder representing the government in the establishment of the Post Bank. The purpose of the Bill is to take the Post Bank and amend it. The post bank has been established but it is under the Post Office’s holding company. The Post Office does not have the liquidity to get a license for the Post Bank from the Prudential Authority that was established by the Financial Sector Regulation Act. To get the post bank to operate properly and to get a license, the holding company’s structure has been taken away from the Post Bank, and the Minister of Communication and Digital Technology has been made the sole shareholder.
The consultations, as outlined in the memorandum, include the Minister of Finance because the Minister is directly involved in the Financial Sector Regulation Act and the giving of licenses. The letter from Mr B Maneli, Chairperson of the Portfolio Committee on Communications, states that this matter is within the Portfolio Committee on Finance’s domain and wants to know if the Committee has any issues or concerns with the Bill that they would like to put in writing. The other issue is that another letter came through that asked the Committee to urgently look at the funding of the Post Office. Initial funding of the Post Office is not necessary if this amended Bill goes through because the Post Bank will stand on its own and the solvency issue will be like that of another public entity. One could ask if a similar letter had been sent to the Public Enterprises Committee. He was not aware of this but could only imagine. The bill is cross-cutting various portfolios like communications,  finance, and public enterprises

The funding that the committee on communications is requesting must go to the appropriations committee. This might be late because the division of revenue bill is being adopted today. It will be a matter for the money bills amendment act and the appropriations committee should there be a change in the funding of the post office. The PBO is required, in terms of the money bills act, to advise the appropriations and communications committees on how they can achieve their policy objectives of increasing the funding to the post office.

The Chairperson asked for clarity on what is it exactly the communications committee requires the Committee in finance to put on record. Does the Committee have to generate a report? Does the Committee have to state that it agrees with the Bill?

Adv Jenkins stated that there is nothing that the Committee is required to report on. He suggested that the Committee provide a written response to the communications committee to acknowledge their email and to indicate if it has any concerns or not. The Committee does not have to submit any report to the House or deal with any A list.

The Chairperson asked whether it is possible for this item to be rescheduled for the next day. The Committee could invite Mr Maneli to the meeting after the Committee has processed the Bills to speak on the matter before the Committee could make its view known.

Adv Jenkins replied that this is possible.

Dr George stated that this is quite troubling. According to his understanding, the Committee received two letters. The first letter spoke about the creation of the Post Bank and requested the Committee’s comment on this. There was a second letter stating that the Post Office would need to be bailed out because the Post Bank is leaving the Post Office. That is the fundamental problem. It seems that the Post Bank is making the Post Office unviable. Now there is a new state-owned enterprise that is a bank. This needs to be discussed thoroughly in the communications portfolio. The finance committee has oversight over the National Treasury. It would make no sense, for example, if the Post Office was worse off financially because there was an entity coming out of it that does not have money and would need to be funded from somewhere. The Committee needs to have a thorough discussion over the letter. The thorough discussion needs to include proper detail of exactly what is being planned and it needs to be processed properly. He does not support a process where we are getting possibly second-hand information. The Committee needs to look at it closely itself. This was problematic from his view.

Mr I Morolong (ANC) stated that he was persuaded by the Chairperson’s suggestion that the Committee invites Mr Maneli to share details on this development with the Post Bank. This will help the Committee to have a better picture of the state of the Post Bank when the Committee finally deliberates and decides what to do. The Committee does not have much knowledge of the details of this issue beyond the letter they received.

Ms Abraham stated that the communications portfolio committee wrote to the Committee prematurely while they themselves were still discussing the same issues brought up by the Committee. The Committee needs to hear what the appropriations committee has to say too as they are the custodians of oversight over National Treasury’s budget. The Committee can have a joint meeting with the appropriations committee where the portfolio committee on communications briefs both committees on what their roles are, if need be and if time allows. The portfolio committee on communications will have better clarity on what exactly they are looking for and which committees can assist them and how.

The Chairperson asked the Committee Secretary to write a letter to Mr Maneli and his technical team requesting their presence in tomorrow’s meeting. National Treasury should also be invited to this meeting. The Committee can have a better understanding of its role and what it is agreeing to in this process. Tomorrow’s meeting and the briefing by the communications chair will determine the way forward and whether a joint meeting with the appropriations committee is needed.

The Chairperson adjourned the meeting.