Thank you Deputy Speaker and hon members, tax revenues are critical to the functioning of any democracy, even if this fact might have previously been taken for granted by many citizens. Lower tax collections have serious consequences and can impact everyone, whether it is through lower expenditures on education, health or through increases in tax rates to make up for shortfalls. The ability of a government to borrow at reasonable interest rates is also dependent on its ability to collect taxes.
The ANC supports efforts by President Ramaphosa's government of rebuilding important state institutions. In delivering his state of the nation address in 2018, President Ramaphosa committed that his government will take steps to stabilise the SA Revenue Service, Sars, restore its credibility and strengthen its capacity to meet revenue targets. The President further declared to the nation that this government is keenly aware of the need to demonstrate that the tax revenue collected from their hard-earned income is being used wisely, productively and for its intended purpose.
As the ANC, we remain accountable to the people of this country. We also support the National Treasury in its efforts to strengthen financial management through assisting the Sars to regularise VAT refund payments and rebuild capacity.
The tax revenue shortfalls over the past few years have partly been due to the fact that the economy has been growing slower than had been projected. However, we cannot ignore the potential impact of a reduction in the effectiveness of tax administration. Tax avoidance and
evasion will be on the rise in any economy which is growing more slowly and where taxes have been increased.
A strong, capable and effective revenue authority must be there to limit those activities and make sure that the correct amount of revenue continues to be collected. We call upon the National Treasury to improve its oversight role over Sars and assist it in comprehensively addressing the current governance challenges to maximise revenue collection and restore its credibility as a key institution that should always uphold its reputation.
Given the recent events around Sars, the current leadership have a huge task ahead of it to regain the trust and confidence from the South African public. We call upon the Sars Commissioner, Mr Mark Kingon, to address challenges facing Sars which should include stability of leadership and staff morale. This is because to be able to regain public confidence, the Sars must have employees ready to ensure that when citizens raise concerns; these are addressed efficiently and speedily.
We support efforts by current Sars management to enhance efficiency and provide a better service to large businesses as they have reinstated the Large Business Centre dealing with tax affairs of all major companies. This has benefits for large, medium and small business. Large businesses with complex tax affairs are now receiving dedicated focus and support, while the bulk of the Sars officials are freed up to pay more attention to servicing medium and small businesses.
In relation to the administration of international trade across our borders and the collection of much-needed revenue, we call upon Sars to continuously enhance its operations by providing a seamless and responsive service to all our citizens; enhancing processes and leveraging technology to make it easier for compliant clients to discharge their fiscal responsibilities; and comprehensively addressing noncompliance and illicit activities that pose a risk to South Africa's economic and physical security.
It is important to also highlight the positive outcomes of policies that have made positive contribution to our
citizens' lives in the democratic era. The Employment Tax Incentive boosts job creation. The Employment Tax Incentive was introduced on 1 January 2014 to share the cost of hiring young inexperienced workers between employers and government. The incentive was reviewed and extended in 2016 and 2018. The most recent review found that the incentive's positive benefits are more pronounced in smaller firms.
In 2015-16 about 31 000 employers claimed the incentive for 1,1 million individuals. The tax expenditure associated with the incentive amounted to R4,3 billion in 2017-18. The National Economic Development and Labour Council, Nedlac, conducted a review of the incentives drawing on independent research on the effects of the programme in 2014-15 and 2015- 16. The review found that the number of employees and employment growth rates increased significantly in firms claiming the incentive.
The effects were most pronounced in firms with less than
50 employees, though positive effects was held for all firm sizes. There is no significant evidence that the incentive displaces older workers. The incentive improves
employment growth in firms that were growing before claiming, and firms with shrinking employment, demonstrating that it also plays a role in halting job losses. Employers tend to retain workers after the two- year eligible period passes because the employees have gained experience and on- the-job training. Young workers indicated that the incentive created opportunities they would not otherwise have.
The ANC, as a liberation movement, is still driven by the spirit of the President of the ANC and father of the nation, Tata Madiba and his word:
As long as many of our people still live in utter poverty, as long as children still live under plastic covers, as long as many of our people are still without jobs, no South African should rest and wallow in the joy of freedom.
Thank you. [Applause.]