Sihlalo, ndivumele ndikhahlele kuSekela Mongameli weli lizwe, aBaphathiswa, ooSekela Baphathiswa kunye namaLungu ePalamente ahloniphekileyo. Egameni lombutho wesizwe ndithi mpilo nde, Sihlalo, mfo kaMufamadi, ngale mini yokufika kwakhe emhlabeni. (Translation of isiXhosa paragraph follows.)
[Dr Z LUYENGE: Chairperson, allow me to salute the Deputy President of this country, Ministers, Deputy Ministers and hon Members of Parliament. In the name of the ANC I greet you all, as well as the chairperson, Mr Mufamadi, on his birthday.]
The ANC, as a responsible organisation, has another story to tell, a big one, about taxation.
Hon Chair, I would like to present the input, which is viewed by the ANC as an answer, in regard to ensuring that sustainable public finances and a stable tax base are the anchor of the country. Therefore, the ANC-led government has, over the past 20 years, ensured the protection of the tax revenue base so as to support the fiscus whilst ensuring that the system remains fair. In keeping with this approach, the ANC-led government continues to support the long-term policy objectives of inclusive growth, employment, development and fiscal sustainability. Within the ANC-led government's overall fiscal framework and in the context of rapid globalisation, South Africa's tax reform has since 1994 sought to improve the efficiency, equity and international competitiveness of its tax system.
These far-reaching changes implemented in the tax system are informed by both the ANC's domestic fiscal policy priorities and its response to economic globalisation. Broadening the tax base and reducing statutory tax rates are central pillars of the ANC-led government's tax reform agenda. Tax amendment proposals have been guided by equity and fairness, efficiency, intersectoral neutrality, certainty and consistency, simplicity in administration and a lighter compliance burden for taxpayers, all as central tenets of a good tax design and sound tax principles.
Over the past 20 years of democracy, the ANC's tax amendment proposals have been guided by the following: the principle of equity, whereby all residents should contribute to the fiscus in proportion to their ability to do so; the principle of simplicity, in that taxes should be easy to understand and should be collected in a timely and convenient manner; the principles of transparency and certainty in the way taxes are calculated and collected, being certain of and supported by transparent rules and procedures; and the principle of efficiency, which causes taxes to be raised in a way that interferes minimally with the economic decision- making.
According to the hon Minister of this department, meeting South Africa's development challenges requires sufficient revenue to fund key expenditure priorities, while ensuring that public debt and debt service costs are contained and avoid overburdening taxpayers. At the heart of the fiscal achievements is the financial management of the fiscus and the dramatic improvements in revenue collection by the SA Revenue Service, as well as disciplined spending choices.
One of Sars' strategic objectives is to grow the tax register and thereby broaden the South African tax base. Sars has sought to increase the number of registered taxpayers through tax education outreach and enforcement initiatives. The cost of revenue collection is an important indicator of the efficiency of Sars and is generally used as a benchmark internationally. This ratio is calculated by expressing the cost of internal operation as a percentage of total tax revenue. During the past five years, the cost of revenue collection varied between a low of 1,04% in 2008-09 and a high of 1,17% in 2009-10. This surge was mainly due to the extensive modernisation investment, which significantly improved the efficiency of its operations and specifically accelerated processing turnaround times, raised service levels and increased efficiencies. For the 2012-13 Budget the ratio was 1,07%, slightly lower than the previous year due to operating costs increasing at a slower rate than the revenue.
Among the key factors which have encouraged growth in compliance are improvements in the ease of submission through electronic filing, prepopulation of returns and third-party validations, along with the introduction of penalties on outstanding returns.
The system of e-filing continues to grow and less than 1% of filers still make use of the paper-based channels to submit their returns, which is a massive improvement from the 98,8% that made use of paper based channels in 2006. During the 2009 tax season 2,3 million returns were assessed within 24 hours. This volume increased by 18% in the 2010 season to 2,7 million returns.
Since 1994, tax policy has consistently delivered revenue growth that has enabled the fiscus to reduce deficit while expanding public services. The programme of fiscal discipline, sound fiscal management, efficient taxation, focused spending programmes and continual tax relief remain hallmarks of the ANC-led government's taxation policy. All of these principles have been recognised, both nationally and internationally, as defining features of financial management and have seen the ANC lauded globally in this regard.
Robust growth in tax revenue has contributed to the continued strong fiscal position that provides the platform for further tax reforms in every consecutive year's budget. The ANC-led government remains committed to a tax reform programme that improves the efficiency of the South African economy and contributes materially to investment and job creation.
In conclusion, the good story is that over two decades the ANC administration has built a progressive tax system founded on the principles of equity, simplicity, transparency, certainty and efficiency. Through the efficiency of Sars, tax revenue has remained buoyant in 2013-14, with the result that the revenue estimate presented in last year's Budget could be revised upwards by a billion to R899 billion. The ANC believes that the government has a duty to ensure that conditions are created to meet the basic needs of the population and, in the context of taxation, this will be achieved through a fair, progressive and efficient system of taxation. One could be deterred by the views of the opposition, especially hon Harris, who had the audacity to come to this podium and present what is a tautology, by presenting the same inputs that he presented during the debate on the state of the nation address, which is something that undermines the integrity of the members who are listening and the communities that have brought us here.
The hon Minister has lauded a number of aspects that have been raised by the department, and cost-effectiveness in spending is a cornerstone of all those aspects. The fact that we need to be responsible enough and work together does not necessarily mean that ...
... kufuneka kubekho urhwaphilizo, kube ngathi kufe inkomo, ibe ngulowo athi ndimanqe; athi omnye ndimafu; athi omnye ndiza kubamba intloko njengokuba abanye bezibona beziinkulumbuso zephondo laseMpuma Koloni abanye bekhetha iGauteng. Akuqhubeki loo nto eMzantsi Afrika. Abantu baseMzantsi Afrika ... (Translation of isiXhosa paragraph follows.)
[... there must be corruption, as if a cow has died, where it is the survival of the fittest as to who gets which part; others choose the head, just like those who want to be Premier of the Eastern Cape province and others choose Gauteng. It is not like that in South Africa. People of South Africa ...]
... have been liberated for the past 20 years and they have a reason to vote and they will do that come 7 May 2014. The ANC therefore supports the Fiscal Framework and Revenue Proposals in order to ensure that the gap between the haves and the have-nots is not just reduced, but closed. It will be closed as long as business goes on to assist government by employing more than the government can, because government is not an employment agency. Government has the responsibility to ensure that it creates a climate conducive for business to do the work and part of that work is to employ. Thank you. [Applause.]