Madam Deputy Speaker, as a party that believes in the devolvement of powers to the lowest level of government possible, the IFP would under most circumstances not support legislation that expands the national Minister of Finance's role in the finances of local government. However, with the state of municipal finances a continuing and serious concern, the Bill before the House is both timeous and necessary, and the IFP will therefore support it.
Primarily, the Bill seeks to do two things: Firstly, it will regulate the manner in which municipalities can impose surcharges on fees for services, and secondly, it will provide for the authorisation of municipal taxes, levies and duties by the Minister of Finance.
The Bill insists on a consultation process before the review of taxes could be implemented. The IFP welcomes the part to be played by the Minister of Finance in consultation with his colleague, the Minister of Provincial and Local Government, and the fact that he will also have to consult with the relevant MEC in the applicable province, with regard to local government taxation.
It is very important to note that the Bill will not apply to user charges for electricity, water etc, that is, those that are already levied by municipalities and which make up a very large part of their revenue base. This exclusion is welcomed by the IFP.
The Bill also recognises the municipal base tariff that is needed to cover overheads and operating costs, as well as provide a reasonable rate of return to municipalities. We support this as a realistic mechanism.
With the phasing out of regional services councils and Joint Services Board levies, it is expected that as much as 7% of municipalities' revenue stream could theoretically be lost. This income source must thus be replaced in one or other form.
The IFP agrees that the RSC levies were not an optimal instrument in terms of sound taxation principles, as was found by the Margo and Katz Commissions, and that they had to be phased out to provide a fair and equitable tax system in South Africa. National government has already indicated that the revenue lost owing, to the phasing out of these levies, would be returned to municipalities via the national Budget, and that alternatives would be considered.
The IFP applauds the government's commitment to a smooth transition from the old to the new system by providing the replacement allocations to municipalities, which would be based on the historic RSC and JSB levy income that was collected.
We also welcome that the Bill will make sure that the manner in which municipalities exercise their fiscal powers is not detrimental to the national economy on which so much rests regarding the improvement of the lives of so many South Africans. The IFP will support this Bill.
In conclusion, with reference to the Minister's previous Bill that he presented over here, we also support the aspect of amnesty for the small and medium organisations. I would also like to remind the Minister of the success that was achieved way back at the time when we introduced the amnesty on foreign exchange and the repatriation of capital. I am glad to say that the Minister will remember that at that time it was the IFP that first mooted that idea, and I wish him well in this new exercise as well. Thank you.