Speech by Hon Des Van Rooyen in the National Assembly On Tax Administration Bill
24 November 2011
Honourable Deputy Minister
The political necessity of any State to advance their programmes and ensure the relevance of these programmes to their political future depends in part on an established and well functioning taxation system that directs both tax liability provisions and tax administration provisions.
The economic base of the state is not just about an ideological discussion of what the macro-economic fiscal and monetary policy principles should be. True it is necessary to have ideological clarity on macro economic principles but then the task of driving the state is very dependant upon a taxation regime that will realise those ideological convictions.
If the state does not address this, it follows all the dangers of becoming detached from its base, its human resource, the people unable to financially address their demands and unable to put into practice policy decisions that would result as in the case of the ANC, in a better quality of life.
Speaker, a tax regime is led firstly by clear policy. Here the ANC and its government have been able to put together a combination of taxation policies which reflect the ethos of the organisation and its policy directives. ANC taxation policy speaks to the progressive nature of the South African taxation regime, in which the poor are shielded whilst the wealthy contribute accordingly.
Secondly ANC taxation policy speaks to the redistributive nature of the South Africa taxation system, something which this House has witnessed during at many Budget Speeches of the Minister of Finance which has assisted the poor and those on low income.
Thirdly ANC tax policy speaks to an effective administrative tax system that adds value to the fiscus and the economy, through its provisions assisting in the building of the Domestic economy and GDP.
Fourthly ANC tax policy speaks to the ongoing need for tax reform, as part of the overall transformation of taxation legislation and the financial sector.
These four pillars are the driving force form behind any legislative change to a taxation regime. Today we deal specifically with deepening the taxation reform in our country that is necessary so as to ensure that we have a fiscus that can assisting in bringing into reality our vision of a National Democratic Society is characterised by a thriving and integrated economy that has the ability to create employment opportunities, an economy in which increasing social equality and economic growth form a virtuous cycle of development, which progressively improves the quality of life of all citizens, deals decisively with poverty and frees the potential of each person.
An economy in which the socio-economic rights of all are progressively realised, including through fair labour practices, social security for the poor, the realisation of universal access to basic services and ongoing anti-poverty campaigns that promote the economic integration of all communities.
An economy, where state, cooperative and other forms of social ownership exist together with private capital in a constructive relationship, and where democracy and participation lead to growing economic empowerment.
Speaker, the Bill incorporates into one piece of legislation generic administrative provisions which are currently duplicated in different tax Acts. It seeks to achieve a balance between powers and duties of tax collection and rights and obligations of taxpayers. It is a preliminary step in the re-writing of the Income Tax Act and assists in this re-write by dividing the work into more manageable parts.
The principals that we have adopted in approaching the draft are as is the case in a range of ANC financial policies drawn from international best practice. Here the principles of: equity and fairness; certainty and simplicity; efficiency; and effectiveness apply.
What the ANC intends the Tax Administration Bill to achieve is a simplified and harmonised piece of legislation in that taxpayers will only have one tax administration Act to deal with in which all the duties and rights with regards the tax law is set out in a simplified form. In addressing the administrative burden on tax collection the Bill reduces unnecessary and duplicate provisions and inefficient and ineffective provisions are removed.
What the ANC is doing with this Bill is to ensure a more modern and responsive revenue administration which will provide a better service for those who remain tax compliant, as system that can reward and serve them better whilst at the same time we are bringing in stricter enforcement, assessment and collection powers to deal with the increasingly sophisticated tax evaders.
In line with the Constitution, the rights of taxpayers and the obligations of tax collection are balanced. Greater equity and fairness is also introduced through this Bill which again is a Constitutional obligation.
Speaker we held comprehensive public hearings on the Bill in Parliament. These hearings raised critical issues, highlights of which were as follows:
The introduction of a Tax Ombud as a mechanism to address service failures and failures in respect of taxpayers rights received attention. This will provide an effective recourse for taxpayers to balance powers and rights. The Tax Ombud has been introduced to deal with two kinds of dispute that arise, i.e. dispute on interpretation of law and dispute on administration of law. The powers of the Tax Ombud are powers of review and powers to mediate. It reports directly to the Minister of Finance.
Another matter that came up in the hearings was the protection of legal professional privilege during search and seizure and the right to claim damages arising out of search and seizure. This power may only be invoked by a senior SARS official on reasonable grounds. This may include the imminent removal or destruction of relevant material found on premises and that the delay in the issuing of a search warrant would defeat the objective of the search and seizure. It does not apply to private dwellings unless these dwellings are used for trade or the occupant contents to search and seizure. Other organs of the state and their officials have similar powers.
A third key consideration of the public hearings was the clause which deals with the Legal Professional Privilege. This is a legal principle in which certain information shared between client and lawyer may not be disclosed without the clients consent. The Bill recognises this but does not extend this principle to tax practitioners who are not lawyers.
In conclusion, the Bill seeks to considerably streamline and enhance tax administration. It will create greater certainty in tax administration and reduce the number of disputes between SARS and the taxpayer. It certainly enhances the rights of taxpayers and at the same time enhances tax morality.
The ANC Administration Bill supports the Tax