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Delay on aspects of tax act shows flawed law-making

Friday, 19 February 2016   (0 Comments)
Posted by: Author: Natasha Marrian
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Author: Natasha Marrian (BDlive)

The Cabinet’s decision to delay the implementation of aspects of the Taxation Laws Amendment Act is in part a move to appease African National Congress (ANC) ally the Congress of South African Trade Unions (Cosatu). But it is equally clear that it is, once again, a result of the government failing to follow due process in implementing legislation.

Thursday’s Cabinet statement said a "number of organisations and individuals have expressed concern about the implementation of the new changes". But it is nonsensical that a bill has to be passed into law before the government wakes up to the fact that it is contested.

The Presidency issued a statement on January 27 citing the "extensive consultation process" over the act, which spanned more than two years. In the same statement, it said 15 meetings had taken place in the National Economic Development and Labour Council (Nedlac). Cosatu and other federations say this is not true.

Nedlac has no report on the matter, which indicates that the proper procedure was not followed. Even in cases where there is disagreement, there should be a report at Nedlac.

While the Presidency adamantly claims the government had conducted the requisite consultation before the bill was signed into law in December, President Jacob Zuma has assigned Minister in the Presidency Jeff Radebe to oversee discussions between the Treasury and Cosatu.

What need would there be for further discussion if the requisite consultation had been conducted?

"The bill was first presented in Parliament in 2013. There were 25 other meetings with labour unions in the period up to 2015," the Presidency said in its January statement. Was the Presidency dissembling?

The underlying message conveyed by the government’s capitulation is that it is incapable of following processes and has to be blackmailed into doing so. At a time when the ANC and its president have woken up to the fact that the economy has to be an apex priority, flip-flopping over tax laws can only send negative signals.

It also speaks to parliamentary processes — in the Constitutional Court case on Nkandla, Parliament was exposed for its shoddy oversight over the executive.

The latest backtrack is yet another indication of the flawed law-making process in SA. Zuma stressed the importance of getting the country’s state-owned entities (SOEs) on track, releasing a report last week that he received as far back as 2012 on reforming public enterprises.

Political meddling, patronage and poor governance are at the root of the problems in many SOEs, but is it not Parliament’s responsibility to exercise oversight over these companies?

Of course it is, yet many are allowed to rot and decay while parliamentarians queue for the buffet.

Cosatu has not hailed the government’s surrender on the Taxation Laws Amendment Act as a victory, saying it would continue its campaign against the legislation until the sections it opposes are scrapped. It has been fighting for a comprehensive social security package since the early 2000s, and its stance towards the amendments held fast to the position that the law had to be accompanied by such a package.

Despite the bill passing through Parliament, Cosatu expressed shock when it was passed into law. But then again, it has been rather preoccupied with its own marital breakdown since 2012. Its rhetoric is tame, though — the very outcome desired by the ANC and the government.

Cosatu has to be aware that delaying the implementation of the annuitisation aspect of the law is intended to shut down its loud opposition and whip workers into line in time for the upcoming elections.

Cosatu’s opposition to the Employment Tax Incentive Act has almost entirely died down, despite its initial vociferous opposition, also on the basis that it had not been adequately consulted. A similar intervention was made in the battle within the federation ahead of the 2014 polls. The ANC stepped in to avert a split on the eve of the election, but thereafter it expressed concern from afar as the National Union of Metalworkers of SA was axed, along with its 320,000 members.

The same outcome awaits Cosatu this time around — this is inevitable given its waning political capital.

• Marrian is political editor.

This article first appeared on



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