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Cosatu may win tax battle

01 February 2016   (0 Comments)
Posted by: Authors: Setumo Stone and Hlengiwe Nhlabathi
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Authors: Setumo Stone and Hlengiwe Nhlabathi (City Press)

A halt of the implementation of the new tax laws by March 1 is one of the possible outcomes in the ongoing ANC-sanctioned discussions between labour federation Cosatu and Treasury.

City Press has been told Cosatu was given a sympathetic reception at the ANC’s national executive committee (NEC) meeting that ended on Wednesday, which would explain the cautiously optimistic tone adopted by federation leaders post the gathering.

Cosatu was this week hopeful the pension reforms would be put in abeyance after the federation "managed to get the ANC to see its point of view”.

The new tax law will enforce the annuitisation of two-thirds of provident fund savings on retirement from the beginning of March this year. Currently, provident fund members are able to cash out their accumulated savings as a lump sum when they retire or resign.

On Thursday – a day after the presidency issued a statement declaring the debate on the new tax laws closed until 2018 – the ANC followed up with a statement encouraging fresh talks, while the SA Communist Party said the presidency’s version was "concerning”.

In an interview on Friday, Cosatu president Sdumo Dlamini chided presidency staff for issuing the "unfortunate” statement, saying they had acted "as if they have entered the political space”.

Dlamini said there was "a political process” under way between the ANC and Cosatu in an effort to address issues that were "not considered well” when the law was passed.

"Such statements are undermining the political processes we are undertaking [and] it is quite unfortunate,” said Dlamini.

"The ANC cannot talk to taxation law to say it must be put in abeyance. It is government that must make that decision, or Parliament,” he said.

He said the ANC statement on the matter carried more weight and was "an acceptance that Cosatu is raising genuine issues, which should be taken on board by the parties that are involved, including Treasury”.

Preparations were under way with the consensus-seeking body for business, labour, civil society and government, Nedlac, for all the stakeholders to meet, at a date yet to be determined.

The ultimate solution, he added, was for the complete overhaul of the law, which Cosatu claims was sneaked through Parliament without proper consultation.

Cosatu has scheduled a special central executive committee meeting to focus solely on tax-reform developments.

Dlamini said Treasury had written a letter to Cosatu on Wednesday about its willingness to talk and be persuaded.

"If people come with a solution, we will look into that. The ideal situation for us would be to repeal the law or engage and reach some form of compromise,” he said.

Finance Minister Pravin Gordhan’s spokesperson, Phumza Macanda, said: "I cannot go into detail, save to say the minister is in contact with all role players to understand their concerns. He is committed to constructive dialogue and open engagement on the issues.”

Presidency spokesperson Bongani Majola did not respond to requests for comment.

Meanwhile, the ANC came out of this week’s NEC lekgotla with a surprise announcement that it had decided to review all trade agreements dating back to 1999.

ANC secretary-general Gwede Mantashe was spitting fire, saying South Africans needed to look for other markets within the continent.

He related how the country needed to avert a situation in future where it was being "bullied” – as was the case during the recent African Growth and Opportunity Act (Agoa) negotiations held with the US.

Agoa is a unilateral US preferential trade programme enhancing market access for qualifying sub-Saharan African countries. It has helped South Africa more than double its exports to the US since 2000.

As part of its eligibility criteria, Agoa requires that beneficiary countries remove barriers for US trade and investment. A stalemate between South Africa and the US occurred earlier this month, relating to antidumping duties imposed on US frozen chicken portions.

Talks resulted in the department of trade and industry agreeing to allow a quota of 65 000 tons of US frozen chicken portions into the local market, waiving antidumping duties. The US had demanded 140 000.

Mantashe said on Wednesday "the US is not our biggest trading partner; China is.

"Yes, the US is an important trading partner but it does not mean it must bully us. We must look for other markets and increase access in the region.”

His statement implied that the ANC was upset over how the world’s leading economy had flexed its muscles and threatened to cut off ties with South Africa.

Trade and Industry Minister Rob Davies told City Press that, during discussions this week, "it became clear that a lot of the [ANC NEC] members have not been following trade agreements and negotiations”.

"One of the things people said was that the political leadership needs to be much more informed about what is going on on the trade front.

"I welcome that because there are important things that happen,” he said, adding this prompted the decision "for us to look through the trade agreements that we are a part of [in terms of] what is happening ... where we need to go and how we make sure they are yielding maximum benefit for the country”.

"What we are essentially trying to do is to change the fundamental architecture of trade,” said Davies.

This article first appeared on city-press.news24.com.


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