Tax: did the Presidency lie to you?
Johannesburg - The government appears to have lied when it said there had been thorough consultations with its social partners on the Tax Laws Amendment Act containing retirement reforms.
Independent Media can reveal that claims made by the Presidency and Treasury this week that there had been a total of 15 meetings with labour, business and community representatives to engage on the controversial reforms at the National Economic Development and Labour Council (Nedlac) are false.
Minutes of meetings held by Nedlac’s Public Finance Chamber and Retirement Reform Task Team between October 26, 2012 – when government first tabled the retirement reform proposals – and August 25 last year, proved Cosatu and other unions had been right in their contestation of the government’s version of events.
Independent Media is in possession of the minutes and a Nedlac status update report dated January 2016, which says: “A Nedlac report was not produced, given that the engagements on Tax Harmonisation Proposals, of which Retirement Reforms are part, were not finalised at Nedlac.”
According to the organisation’s protocols, a Nedlac report is the official and public report on the consideration of a matter by Nedlac which captures agreements and disagreements on matters.
Nedlac spokeswoman Kim Jurgensen also confirmed that no such report existed on the contested laws.
“There is no Nedlac report on the retirement reforms/Taxation Laws Amendment Act,” she said.
However, this week the Presidency stood its ground that it had followed all due processes.
“There was an extensive consultation process over the Tax Administration Laws Amendment Act, spanning two years, before it was signed into law by President Jacob Zuma. Media reports that there was no consultation are incorrect and misleading,” read a statement it released on Wednesday.
According to the recorded minutes, there were only three meetings held in 2014 by the task team established to discuss the retirement reforms, and there were no engagements on the actual laws which were only proposals at that stage. Instead, labour and community leaders informed government of their mandate, which dictated they could not discuss the retirement fund preservation in the absence of comprehensive social security reform proposals.
At the time, government said: “The comprehensive social security reforms were still being considered by cabinet, and were not yet ready for engagement at Nedlac.”
However, it continued to stress the importance of retirement preservation, more so in light of the absence of social security.
The reforms will compel workers to preserve two-thirds of their retirement savings in annuities, allowing them to withdraw only a third as a lump sum from their provident funds.
Cosatu and the National Union of Metalworkers (Numsa) are planning to strike over the lack of consultations, demanding the law be repealed as workers wanted to hold on to their right to choose whether to withdraw their savings at once or invest further at retirement.
What enraged them further was the government’s insistence that it had done everything by the book.
The conclusion of a report, dated March 26, 2014, to the Nedlac management committee on the work of the reforms’ task team read: “In the absence of the comprehensive social security reform proposals, engagement on the retirement reform proposals on retirement preservation were suspended.”
In August last year, a task team on comprehensive social security met to discuss the government’s progress on the formulation of a discussion paper on the matter.
There, the government reported the document had been revised and presented to the Social Protection, Community and Human Development Cluster for consideration.
Labour demanded to know the date on which the paper could be expected and government said no date had been set.
“The retirement reforms should not be prioritised over the comprehensive social security. Instead, these issues should be addressed in a holistic and comprehensive manner as mandated by the (Nedlac) management committee,” labour said. While the government agreed with this view then, it also stuck to its guns on the “urgency” of the retirement reforms.
Business expressed concerns over the effect of delays to the finalisation and tabling of the paper by government. According to Business Unity SA (Busa), several “presentations” were made by government on both issues in different Nedlac forums, but there was no conclusion reached by parties.
Busa’s executive director for social and transformation policy, Vanessa Phala, said the organisation had also requested clarity on a number of issues.
“Busa has always indicated its commitment to engage on this issue; we respect Nedlac as the social dialogue institution. While we raised several issues for clarity both in respect of process and substance, Nedlac deliberations were not concluded,” explained Phala.
Numsa said they were concerned with the manner in which the law was “snuck in”, though they were not surprised by the government’s conduct as it had always considered it to only be concerned with the interest of finance capital.
“The government has consistently treated workers with disrespect and contempt. If workers were to be encouraged to save, there are areas we could engage on, including ensuring their monies were not heavily taxed,” said Numsa general secretary, Irvin Jim.
The ANC said this week that it was facilitating talks between Cosatu and the Treasury.
Calls to Presidency spokesman Bongani Majola went unanswered. Treasury spokeswoman Phumza Macanda said she would reply to Independent Media’s queries on Friday, but failed to do so.
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