I lay upon the Table:

In laying the Report of the Commission of Inquiry into the Postal Vote System and the Registration of Voters on the Table I wish to explain that the report is at present available in Afrikaans only. The report is being translated and will be printed in both official languages. It will be ready approximately towards the middle of March 1963.

As soon as printed copies of the report are available, they will be distributed amongst honourable members of this House.

The report is still being considered by the Government. As soon as the Government arrived at any decisions in regard to the recommendations by the Commission, they will be announced without delay.

I move—

I second.

I wish to move as an amendment—

To omit all the words after “That” and to substitute “this House declines to grant leave for the introduction of the Bill, because, inter alia—

1. (a) it is the first step towards the fragmentation of the Republic into separate independent States;
2. (b) it is being introduced at a time when the commission appointed to safeguard the rights of the Whites in the Transkei has not reported; and
3. (c) important groups of the Bantu population in the Transkei have not been adequately consulted.”

I want to make it clear that the opposition from this side of the House does not come because we feel that it is wrong that the Bantu population of this area should have a large measure of control of their own affairs and more particularly those more intimate subjects which affect them personally. In fact, we on this side of the House believe that it is right and proper that the Bantu in the various provinces should have control of those affairs which affect them more intimately. But we are opposed to the Bill, the long title of which we have before us, because we believe that it is part of the pattern outlined by the Prime Minister and hon. members on the Government side of the House through the years that this is to be the first step towards the ultimate fragmentation of the Republic. It is not necessary for us in this debate to determine exactly when that stage was reached in as far as the policy of the Government is concerned. We believe that this is the first step in a pattern which may rapidly lead us along a road from which it will be difficult to return. We believe that it is a step by which the Government intends to place the country in a position where we are advancing past points of no return. So far as we can see from this Bill, no point of no return will have been reached at this stage, but this is the first step and because we disagree with that policy, because we believe it holds dangers not only for the future of the Republic but for the future of Western civilization and the White group in South Africa, we believe it is right that our opposition should be noted in however limited a form at this stage. But, Sir, there is something else that worries us about this legislation, and that is that it is well known that in anticipation of this legislation a Commission was appointed to safeguard and examine the rights of the Whites in the Transkei. Certain members of that Commission have made statements indicating that the position of the Whites in the Transkei would be safeguarded for many years. Sir, that Commission has not yet made a report to the Government, so far as we know. That Commission has brought forward no recommendation, and despite the fact that the Government thought it necessary to appoint that Commission, despite the fact that it thought it necessary to send that Commission to the Transkei to consult with the Whites in that area as to what their position is going to be in the future, before any report has come from them, we find ourselves in the position that the Government is already coming forward with legislation at this stage. There is a third point and that is that we have not yet available to us the official report of the discussions of the Territorial Authority of the Transkei in respect of proposals made by their Recess Committee on the question of a Constitution, and we as members of the Opposition have not yet heard the official views of large sections of the Bantu population in the Transkei; we do not know what the attitude to this legislation is. We do know that the Paramount Chief of one of the most important tribes has made representations that he should be allowed to see the Minister of Bantu Administration and Development before this Bill is introduced. We understand that the hon. the Minister has not yet seen him. While he may represent a minority or while he may represent a majority —we do not know—the fact is that it would appear that he has not yet had the opportunity of putting his case before the Minister of Bantu Education and Development and, through him, to the Government.

If he is agreeable, how would that affect your attitude?

Here again is an illustration of the attitude of the Government. It makes up its mind to go ahead with plans regardless of the feeling of the people most intimately connected. Sir, on many occasions in this House our objections to the policy which we believe will lead to separate independent states, to the dismemberment of the Republic, have been voiced. This is perhaps not the time to outline those objections here once again, but I think it must be clear to everybody who has followed Government statements and Government policies that this is the first step along that road. For those reasons we feel that our objections should be lodged, and strongly lodged at this stage in the interests of the future of the Republic and Western civilization and all those who stand for that type of civilization within the Republic of South Africa.

I second.

The hon. the Leader of the Opposition has moved an amendment in which he makes three points. I would like to deal briefly with each one of them. He speaks first of all about the fragmentation of the Republic. This is a policy matter in regard to which the Government announced its policy some years ago and the world knows that the intention is to allow the Bantu to govern their own areas. To retreat at this stage would mean a complete reversal on the part of the Government in respect of its declared policy. That is no reason, therefore, for moving this amendment. The hon. the Leader of the Opposition speaks about “points of no return ”. That is typical of the United Party because they are always seeking “points of return ”. They cannot formulate a policy; they are always seeking points on which they can revert to a previous standpoint. They never have the courage of their convictions. They are always seeking an opportunity to adopt a different standpoint or to revert to one which realized that this Government has a standpoint they adopted earlier. I think it is time they and that it has the courage of its convictions and that it is not seeking “points of no return ”.

We come to the second point. He mentioned a commission of inquiry into the rights of the Whites in the Transkei. I am sure that at this stage that is not a valid point because the Bill has not yet been Tabled but according to the report and as it was supplied by the Territorial Authority of the Transkei, it is very clear that the rights of the Whites there are being safeguarded. The commission appointed to investigate this matter must only investigate how the rights of the Whites can be safeguarded; it must not investigate the principle. That therefore is also no reason why there should be any delay at this stage. Provision will be made in this Bill for the safeguarding of those rights; all that concerns that commission is the question of how this must be done.

We come now to the third point, that there was no time for certain Bantu groups in the Transkei to put their standpoint. There was more than enough time. Last year a report was submitted to the Territorial Authority of the Transkei and that report was fully discussed by the Territorial Authority. This was done last year in May, and after May attention was given to the constitution which had to follow that report, and the Bill as it will now be introduced was again discussed by the Territorial Authority on 11 December. There was a period of eight months, therefore, in which every section of the public in the Transkei had the opportunity to express its opinion on this matter. They expressed their opinion on the matter and there was the greatest unanimity, except for one Paramount Chief and he alone voted in the minority. Even his own subordinate chiefs voted against him in this matter. Why he wants to see the Minister at this stage nobody here knows. Only he knows, but it certainly has nothing to do with the Bill. The hon. the Leader of the Opposition has given no grounds at all this afternoon in support of his amendment.

The hon. member for Vereeniging (Mr. B. Coetzee) asked my leader whether we would accept this measure if Chief Saoata was agreeable.

I did not ask that. I asked what his attitude would be. I did not ask whether he would accept it.

Well, you asked what our attitude would be, and he says that that is not the same as asking whether we would accept it. Sir, the point is this: Chief Kaizer Matanzima accepts it; we do not accept it, and we do not oppose it merely because Chief Sabata is opposing it. We are opposed to a measure of this nature because we are satisfied that it would lead to the doom of South Africa. If the hon. member for Vereeniging knew anything about Chief Sabata’s policy he would know that he does not support our policies, that he wants multi-racial states with “one man one vote” for which we do not stand. We have a pretty good idea of what is to be in this Bill although it is not before us yet, and that is so because a Bill with the same title was discussed in the Transkeian Territorial Authority but we know too that the Prime Minister made it clear in this House that he was not going to be bound by what happened at that session of the Transkeian Territorial Authority. That he would not necessarily accept a Bill which was passed by that Authority, and therefore we do not know exactly what the terms of this Bill are to be. But what we do know is that there has not been consultation on this important matter. We do know that there is consternation amongst the Bantu in the Transkei as to what is happening. The hon. member for Heilbron (Mr. Froneman) says that the Bantu have been consulted. The only people who have been consulted are the chiefs and the headmen and the Councillors of the Territorial Authority and the regional authorities. The Minister, and especially the hon. member for Heilbron, must know that Chief Sabata as head of the Tembu’s is opposed to this measure and that the only public meeting which has been held to discuss this matter was held by Sabata at his great place, and there his followers, who were there in their hundreds, opposed the measure and in fact appointed a committee to draw up an alternative constitution. But what happened after the appointment of that committee? The chairman of the committee was arrested the next day, although he was subsequently released again. But how can you have discussions by these people when they see what happens to anybody who opposes the Government’s policy? While Proclamation 400 is in force they cannot hold meetings, as the hon. member for Heilbron must know. They cannot hold meetings to protest against any measure. And what discussion was there in the Territorial Authority? A week before the Authority met, the members of the Authority —only the members—were handed a constitution marked “Vertroulik/Confidential” and nobody could see it. They were told not to give it to anybody. Nobody else could see this constitution until it was presented to that House. No Africans or Bantu or Natives—call them what you will—had the opportunity in the Transkei or elsewhere of voicing their opinion with regard to this constitution before it was produced in that House or when it was produced there. The Minister says that he did not arrange to see Chief Sabata before this Bill was introduced into this House. I accept that, but I want to say this to him that it was common talk in the Transkei amongst the Bantu, and the educated Bantu as well, that a meeting had been arranged and the Tembu’s were satisfied that the Minister was going to see Chief Sabata. The impression was that a meeting had been arranged by the Commissioner-General; that he had made representations on behalf of Chief Sabata so that the point of view of the Tembu’s could be put to the Minister. At the discussion in the Transkeian Territorial Authority there were two motions moved by important men, by Chief Sabata and by Chief Tutor the eldest son of Chief Victor Poto to have the matter delayed, to be given a chance to consult their people. That opportunity was, however, not given to them and the Minister will know that in the discussion on the clause dealing with the constitution of this new Assembly there was bitter opposition and that the opponents were only beaten by a matter of five votes, and when the voting took place, Chief Sabata and some of his followers were not present in the House. The Minister should take cognizance of that fact. I submit that we in this House, Government as well as Opposition members should be given a verbatim report of those proceedings so that we can see what the attitude of those people was and why they objected. Both Government members and we ought to know what took place at that meeting.

The hon. member for Heilbron says that the position of the Whites in the Transkei is going to be protected, that the Commission merely had to find ways and means of protecting their rights. But I would point out that the only information we have is contained in the Bill which was presented to the Territorial Authority, and although in the resolution passed by the recess committee there was reference to the protection of the interests of the Whites, there is not one single reference to it in this Bill which was passed by the Territorial Authority.

The White people do not live in the Bantu areas.

Where do the White traders live? Of course they live in the Bantu areas. Sir, one of the Commissioners at Umtata told the representatives of the White organization that the Whites would be protected. He said that never in the history of this country had he known any Parliament to pass legislation which did not safe guard the rights of the White people, and he said they could rest assured that provision would also be made in this legislation to safeguard the interests of the Whites. We in this House want to know what the recommendations of that commission are before a Bill is introduced in this House; we must know what protection the Whites are to be given.

In regard to the question of consultation with the Natives in the reserves, I say that they do not know what is happening, that they do not understand this thing and that the members of the Council did not understand it. There should have been consultation with the White people. Why has the Prime Minister not consulted that liaison committee of White people which he agreed to establish? Surely they are the people who should have been consulted on this matter which so vitally affects them. I say that there should be consultation with the Bantu living outside the Transkei who are also affected by legislation of this nature. There should be much more consultation before this measure is introduced here and the Bill should be published for the whole country to see, and the Nationalist Caucus should be given an opportunity of fully understanding the implications of this measure before the Government commits itself.

We must remember very clearly what is happening here this afternoon. This is not a discussion on the principles of the Constitution Bill which we seek leave to introduce. The principles are not relevant here. The time to discuss the principles is still to come. The question here is whether or not this Bill should be introduced into this House, and we must take note of the fact—and the Bantu of South Africa, particularly the Bantu of the Transkei will duly note—that the Opposition does not even wish to allow a Bill to be introduced to make provision for this constitutional development. And then the hon. the Leader of the Opposition still dares to ask us whether on this road ahead, which is envisaged by this Constitution Bill, there is a point of return. By this time the hon. the Leader of the Opposition ought to know that the road of the constitutional development of a nation only moves forward. He ought to know that in the case of a constitutional development such as this, in which these Bantu have a great interest, they must at least be given the opportunity to have this Bill introduced, but the Opposition wants to have nothing to do with it. But apart from the question as to whether they will be able to see from this Bill what the constitution will look like, hon. members of the Opposition, the electorate and the Bantu, about whom they are so concerned, know what the principles are for which they are striving and which will be embodied in this Bill. What is very significant is that in the course of none of the negotiations which took place in the past and to which the widest publicity was given was there any desire or any suggestion on the part of the Bantu in the Transkei that a constitutional plan such as this should not be proceeded with. At the December meeting in the Transkei no proposals were forthcoming from any of the Chiefs, not even from the Paramount Chief whose name has been so abused here this afternoon. No suggestions were forthcoming from them that this measure should not be proceeded with. Neither was such a suggestion forthcoming at the previous discussions which were held. Hon. members ought to know that this constitutional document which will now receive our attention was preceded by a memorandum on which the recess committee was busy for some time and which was also considered by the Transkeian Territorial Authority at its meeting earlier last year. On that occasion too there was no request that this measure should not be proceeded with. Up to the present moment therefore there has been no Bantu at all who has opposed the principle and the details of this Bill and I say therefore that the Bantu will take note of the fact that the Opposition refuse to allow an opportunity to be given for their proposed constitution to be discussed further. The Opposition must of course realize that even after the introduction of the Bill into this House opportunities will still exist, for the Bantu as well, to discuss it. The hon. the Leader of the Opposition and the last speaker want to know when the Minister is going to meet the Paramount Chief. The attitude of the Bantu can still be ascertained on those occasions and on others. Does the hon. the Leader of the Opposition and that side of the House not know that an opportunity to discuss this Bill does not mean the end of the discussion? It is the start of the discussion. This is the democratic standpoint that is adopted by the Opposition!

The other point mentioned by the hon. the Leader of the Opposition, about which the hon. member for Transkeian Territories (Mr. Hughes) was also rather concerned, was the position of the Whites there. Here I would like to assist the hon. the Leader of the Opposition. He puts the position as though the appointment of the commission of inquiry of whom Mr. Heckroodt is the chairman, was a condition attaching to the plan for the constitutional development of the Transkei. The appointment of that commission was not a condition attaching the Transkeian constitution. The Bantu did not make it a condition and least of all the Whites of the Transkei who asked the hon. the Prime Minister to have their affairs investigated—not even they regarded it as a condition and made it a condition that the protection of their interests should first of all be investigated and settled and that only thereafter should a constitutional plan be decided upon. We all know, and the hon. member for Transkeian Territories ought to know too, that that commission of inquiry is the result rather than the reason for or condition attaching to this Transkei constitution plan. That commission to inquire into the protection of the interests of the Whites is making its inquiry in pursuance of the fact that a constitutional plan for the Transkei is going to be framed, not by way of preparation for it and not as a condition attaching to it, and hon. members ought to remember this. They must remember a further point too. The interests of the Whites in the Transkei are not going to be looked after and covered merely by the Transkeian constitution, merely by this Bill. Are those Whites in the Transkei not subjects of the Republic? Is there no Republican legislation that applies to them? Does this Government not also have duties to perform as far as they are concerned? Why do the hon. the Leader of the Opposition and the other side see the future of the Whites in the Transkei merely in terms of the Transkei Constitution Bill? That is a completely wrong approach. Hon. members opposite must realize that the Bantu leaders in the Transkei and outside of the Transkei were indeed consulted and it is wrong to say, as the hon. member for Transkeian Territories said just now, that there was no consultation. There was consultation, but hon. members on that side must remember one thing and that is that this constitutional plan for the Transkei is a process in which the Bantu themselves took a creative part. It is not something which was forced on them from Pretoria or Cape Town. It is something in which they took a creative part. [Laughter.] Mr. Speaker, we know that organized hollow laughter of theirs. It is the technique of people without a policy. That first document which received the attention of the Government was a creation of the Bantu of the Transkei—the committee report. Thereafter this Bill went through the Transkeian Territorial Authority and the Bantu leaders consulted their people according to their customs and their views in the case of both of these documents which they approved of—those people whom they wanted to consult, although it may be that they did not consult the people whom the hon. member for Transkeian Territories would like them to have consulted. It is not for the Opposition to determine which Bantu have to be consulted in these matters; it is the Bantu leaders themselves, and that is what they did. They even came into the urban areas and consulted their people in the Bantu residential areas of the cities.

Where?

If hon. members opposite do not know, then I cannot help it, but that was done. And in the Transkei they also consulted the persons whom they wanted to consult, according to their views, and whom they felt it was necessary to consult. Of course, I know why hon. members on that side are feeling so bad. It is because they cannot dictate who the people are who should be consulted and how it should be done. I also want to say that hon. members on that side must distinguish very clearly between what the liberal Press states are the contentions and desires of certain Bantu leaders and what the desires of those Bantu leaders actually are. There is a very great difference between a true desire which is cherished by the Bantu leaders and a desire which is placed in their mouths and minds by a liberalistic Press which prescribes all sorts of things for them. The Opposition should also consider this fact because there is a very great difference.

I think we have all listened with a great deal of interest to what the Minister of Bantu Administration has said and it is perfectly clear from what he has said that it is the intention of the Government to hurry this Bill through Parliament and to reach a point of no return as soon as they can. The hon. the Leader of the Opposition made it perfectly clear that we have not reached that point, and it may be a long time before we reach it, but it is quite clear that it is the intention of the Government to reach that point as fast as they can, and the whole of the Bill as represented by the speech of the hon. the Deputy Minister is merely to try and present a picture of a fait accompli merely now requiring the imprint of Parliament to make it a valid Act. But he made one or two statements which I think should be seriously challenged. He says that insofar as the resolution of the Territorial Authorities was concerned there was no objection to the draft constitution—no formal objection.

I said there was no alternative.

It was rejected, and I think the Deputy Minister should have given us the terms of the resolution moved by Dalindyebo, and he should have given us the terms of the resolution moved by the elder son of Victor Poto. What was his resolution in respect of taking the matter back for discussion with their own tribesmen? Does the Deputy Minister know that there was such a resolution that the matter should be taken back for discussion with their people.

He knows nothing.

I am sorry that the Deputy Minister now remains dumb because it is one of the key points in the whole of this matter. That resolution was moved and the gist of the resolution was that the matter should be referred back so as to give the members of the Territorial Authority an opportunity to discuss it with their tribesmen.

Sir, with your permission I want to read out the title of this Bill. The title of the Bill is—

This is a Bill to confer self-government on people living in an area which is an integral part of the Republic of South Africa. It is part of our country. Sir, and this Bill is designed to confer self-government on them. I do not know to what extent the members of the Territorial Authority are entirely enlightened as to what the constitution which they have approved of means. I am not sure how far they know whether that constitution that they approved of has been altered before its coming to Parliament, but I can say with the hon. member for Transkeian Territories (Mr. Hughes) that the mass of the Bantu people in the Transkei do not comprehend what is proposed and what is intended by the Government in giving self-government to those people. But, Sir, they are not the only folk who are to be considered in this matter, quite apart from those of us here in Parliament who have to legislate, but the Bantu throughout the Republic are watching what the Prime Minister has repeatedly said is the first place where self-government will be given to one of the ethnic groups. In passing may I say that there are ten different nations involved in the Transkei and they have not been consulted. Surely when a Bill like this comes before us, the first thing the Government should have done was to have had it published and everybody interested should have been given a chance to see what it contains. We pride ourselves, and we repeat over and over again, that we will protect the rights not of the majority but of the minority. We are not even protecting the rights of the majority to-day. We do not even know what the majority thinks, let alone what any minority may think about it. We have a Bill brought to us in this form after it has been fought out behind closed doors by a small selected group, with the whole of the pressure and the influence of the Government behind their point of view which they are foisting upon the Bantu, and the Bantu have not been consulted. They do not comprehend what is taking place, and at a time when the state of emergency and the particular Proclamation which applied to the Transkei is still in existence, prohibiting the holding of meetings there, we are asked in Parliament to sit down and to pass legislation of this far-reaching character.

Let me come back to the point made by my hon. leader. This Bill is the first step to bring about the fragmentation and ruin of South Africa. This is the fragmentation of our homeland. It is the ruin of our country, this self-government which is being created in the Transkei. Once it has started the Government will not be able to halt the rate of progress. Hon. members opposite will have no power to stay that progress; it will be beyond their capacity. Why should we take the first fatal step, Sir, before the matter has been fully aired before all the people in South Africa, including the voters? Let the Bill which the Government proposes to put before Parliament first go to the people. Let there be ample time for consultation. I cannot imagine a matter of greater constitutional importance to our country than the Bill which is being introduced this afternoon—we have not got the Bill yet. I cannot imagine a matter of greater constitutional importance being introduced with less preparation and less knowledge. In the few days at our disposal before the matter comes up for debate how can we acquaint ourselves with the views of the people, the millions of people, who will be affected? It is quite impossible. If the Government takes this step, Sir, then the blood of South Africa will be on the head of the Government. The step which they are taking now is a step the consequences of which cannot possibly be foreseen by any human being. All those consequences must devolve upon the Minister.

I want to say immediately with due deference that the reasons which were advanced were a political farce, to say the least of it! One thing is very clear and that is that throughout its history our Party has followed this path. Every Prime Minister who sat in this House made the same statement, at one time or another, which the hon. the Leader of the Opposition made here this afternoon, and that is that he undertakes, sooner or later, to give self-government to the Bantu in their own areas. I cannot understand the hon. the Leader of the Opposition. In one breath he says that he is in favour of self-government being given to them and in the next breath he says that it must not be given now. How must one understand such a person? All that this Bill seeks to do is to give effect to those promises which were made; because it is really an inherent desire on the part of the Government and on the part of every Bantu in South Africa, that the Bantu should be allowed to control their own affairs. We feel that this is a right which is their due. This is the first step to enable the Xhosa in the Transkei to achieve that ideal. The hon. the Leader of the Opposition now says that it means the fragmentation of South Africa into various parts. How can such a statement be made? Those Bantu areas are theirs; they were created by history. The promise was made to these people over the years that they would be given self-government in those areas. Now that we wish to give effect to that promise, the country is told that we are fragmenting the whole of the Republic. The hon. the Prime Minister has made it very clear that if they can take it so far, if South Africa reaches the stage where she has to choose between the loss of the whole of South Africa or the loss of the Bantu areas, she would prefer to retain the White area of South Africa. We hope that that day will never come. If a policy of justice and fairness is followed, if effect is given to the promises made over the years, that evil day will never dawn for South Africa. How can they now come forward with the argument that we are fragmenting South Africa? The story that they have been telling the world over the years is nothing but a fantasy and one to which the people no longer pay any attention at all.

In the second place the argument was used here that the commission which was appointed to look after the interests of the Whites has not yet reported. The interests of the Whites have nothing to do with this Constitution. It was not a condition attaching to this Constitution that that commission should first report. The request came from the Whites of the Transkei that a commission of this nature should be appointed to keep a watchful eye on their interests so that if sooner or later their interests were affected by this development, the problem could be solved in the proper way. The commission was not irrevocably bound to the Constitution of the Transkei. In spite of all the incitement, we have received the very good co-operation of most of the Whites in the Transkei. They thanked this Government and the Prime Minister for the steps that we took. They did not ask that this Constitution should not be proceeded with until that commission reported. Where do hon. members opposite get the right to pose as the spokesmen of those people in this House?

The third point is that there was no proper consultation. This is the old story—that there is only one party in South Africa which has contacts with the Bantu and that is the United Party; the National Party is completely out of touch with the Bantu, according to them. Last year the Bantu moved a motion to the effect that the time had come for self-government to be given to the Transkei. That motion was publicized far and wide. A recess committee was appointed and the Prime Minister himself considered the points of view which they reduced to writing and gave them his blessing. Thereafter it was continually under discussion by the Bantu of the Transkei. There were discussions for longer than a year. If there was one thing which was generally discussed last year among the Bantu of the Transkei it was this Constitution. The accusation cannot be made against us that the people were not properly consulted. They went into it properly at the first meeting. They were given a full opportunity to consider the matter. Here and there we found one or two persons who felt that it should perhaps be postponed for a while but the vast majority of the representatives of the Transkei asked us to carry on with it.

Mention was made here of my meeting with Paramount Chief Sabata. He wrote a personal letter to me in which he asked me to discuss certain matters with him. I agreed to see him. There was never any condition that only he should discuss this Constitution with me and that he objected to it and so forth. There were “certain matters” which he wanted to discuss with me. We have this fact that all the Paramount Chiefs except Paramount Chief Sabata came to Pretoria to discuss this matter personally with the hon. the Prime Minister. He intimated that he was ill so there was probably a reason why he did not come. Afterwards, Mr. Speaker, one could not help seeing the hand of the Liberals—and I am not so sure that it was not also the hand of United Party supporters—in the Sabata incident No one can deny that. I want to state without fear of contradiction that if there is one Bill with the terms of which the Bantu of the Transkei are acquainted, it is this Bill. They had every chance to discuss it. They had the right to bring it to the attention of their own council and to raise objections if they wanted to. They had that right throughout. ’

If that was the case, why did Paramount Chief Poto want the Council to adjourn so that they could consult their people?

I cannot reply to that. He did perhaps have a case but his father, Victor Poto, the Paramount Chief, whom I consider to be more important than the son, one of the revered persons in the Transkei, someone who loves his people, did not ask for it. [Time limit.]

Mr. Speaker, if ever there was a piece of legislation which should have been published well in advance of its introduction into this House for the information of the public of this country, then this, Sir, is that legislation. It is a fundamental piece of legislation affecting the future of the Republic of South Africa and its boundaries. I do not know whether I understood the hon. the Minister correctly. I believe, however, that I did. One of the points which was made by the hon. the Leader of the Opposition was that this legislation would lead to the fragmentation of the Republic. And the hon. the Minister in this regard said—I wrote his words down— “daardie kwaaie dag sal nie kom nie ”.

“ Sal * nooit ’ kom nie.”

Yes, “sal nooit kom nie”. He said that “daardie kwaaie dag sal nie of nooit kom nie ”. I understood the hon. the Minister when making that point to say that he believed it would not come. Now, if that is so, Mr. Speaker, I find myself simply unable to understand the words of the hon. the Prime Minister who referred to that very matter earlier during the session and referred, Sir, to the fact that it was the deliberate policy of the Government that that would come about. We now find the Prime Minister being contradicted by his own Minister of Bantu Administration and Development. In other words, the Minister hopes that the day when those areas will be separated from the Republic of South Africa will not come. I want to ask the hon. the Minister in all honesty how he can say that to this House in view of what this House has been told and the Minister’s own statements in this regard in recent times. I simply fail to understand what the hon. the Minister meant when he said that unless it is part of a campaign to lull the people of this country into a false sense of security while the hon. the Minister goes forth with a policy of which dismemberment is a part, a policy which this side of the House regards as one of the most dangerous policies—the most dangerous legislation—which has ever been introduced into this House. The hon. the Minister remains silent. I can only assume, therefore, that I understood him correctly. I will say that the hon. the Minister owes an explanation to this House as to what he meant by those words.

The hon. the Minister complains that the introduction of this matter should be opposed by this side of the House. We regard it as our bounden duty to oppose this legislation even at this early stage, particularly in view of the points made by my hon. leader and others that the Government, although it indicated that legislation was coming, had not made it known before now. It was not made known to some of the people who are as directly affected by it as the rest of South Africa, I can only express the hope that on second thoughts the hon. the Minister will agree to withdraw the motion before the House. This legislation is of such importance that it should definitely have been published well in advance so that the public’s reaction to the legislation could have been obtained— both that of the people in the Transkei and of those in the rest of the country. Because I feel that we are all equally interested in this fundamental piece of legislation.

I think I heard the hon. the Deputy-Minister correctly to say that this was the beginning. That is just what is concerning us. This is the beginning of a course of action which, in terms of this legislation applies to the Transkei. People must realize, if this Government is not removed from power, it will be applied not only in the Transkei but will be applied in Natal, in the Orange Free State and in the Transvaal. In these circumstances I would think that this country, as well as the Opposition in this House, are entitled to ask the Government not to proceed with legislation of this nature at this stage; to withdraw this motion; to publish the legislation so that all can see what it means. So that all those interested will have an opportunity—and I maintain the whole country is interested—of making their views known to the Government. I wonder if the hon. the Minister could give that answer now, because if not, we can only assume that he desires to rush this legislation through the House as quickly as possible before the public of this country wakes up to the dangers which are inherent in legislation along the lines which the Government has indicated.

I submit again that it is the plain and bounden duty of the hon. the Minister and the Prime Minister to take this course. It is utterly wrong that legislation of this fundamental character should be introduced so early in the session without prior notice and with the known fact that it is the Government’s intention to put this legislation on the Statute Book as early as possible. I repeat, Sir, that with legislation of so fundamental a character, it is the duty of the Government at least to give the voters of this country the opportunity of letting the Government know what they think of the line which the Government is taking and the legislation which it proposes to put forward. The hon. the Prime Minister made it quite clear that, as far as his supporters were concerned, the line of policy now being followed by the Government, was different from that followed over the past years. The Government’s duty is clear and I hope they will do their duty.

One wonders when the Opposition will learn to do a thing timeously, to protest timeously, to raise their voice timeously. The Opposition is pretending this afternoon that the contents of the hon. the Minister’s Bill are not known at all. The hon. member for Germiston (District) (Mr. Tucker) knows that everyone who is interested in South Africa and the development in the Transkei is au fait with the principle of the Bill of which the hon. the Minister has given notice this afternoon. There is not a newspaper in the country which has not made the principles and the contents of the Bill known to the public. In other words, White and non-White are au fait with its principles. Does this Bill not owe its existence to a resolution which was passed some time ago in the Transkei? Have hon. members opposite completely forgotten that it was specifically requested? Besides the fact that this Bill is a continuation and practical implementation of the policy which we have been propounding for so many years, it is also before us at the request of the Transkeian territories. The people who are interested in it asked for it. The hon. member for Germiston (District) is worried and he wants to know the contents of it. He can very easily ascertain its provisions. If the motion of the hon. the Minister is adopted, the hon. member for Germiston (District) and the hon. the Leader of the Opposition will have an opportunity of taking the Bill to the country and discussing its details. Then the hon. the Leader of the Opposition and other hon. members of the other side can hold their protest meetings. Both the Bantu and the Whites in this country are greatly interested in this Bill. The Bantu have already discussed the principles of it with the Bantu authorities and accepted them. This is the most important part of the whole transaction because the people who are most concerned with it are the Bantu themselves. They have already adopted the principles as well as the details. So far not one single objection has been forthcoming from them. Do you know what is also of great importance, Mr. Speaker? The contents of the Bill have also been made known to the White people throughout South Africa and thus far, in spite of the allegation of the hon. member for South Coast (Mr. D. E. Mitchell) that it will bring about the fragmentation of the country, we have not received one single protest from the Whites in the country.

We have been protesting for the last 14 years.

Let me ask that hon. member where he held one single protest meeting in South Africa? I am not talking about the protest meetings which took place under the auspices of certain mayors when only 15½ people where present. One has that type of protest. I say that the sooner the motion is adopted, the sooner the country becomes au fait with its principles and details, the better. If what the hon. member for South Coast seeks to suggest does exist, namely, a fragmentation of South Africa, I am perfectly sure that if the White people come to the same conclusion as the hon. member for South Coast, we are going to have a tremendous protest in this country. I would also make so bold as to say that we challenge them to hold protest meetings against this measure in the White areas as soon as the contents of the Bill are known. Then the hon. member for South Coast and his colleagues will realize for the umpteenth time that in regard to this problem that we are solving in a constructive manner, that stigma which they are trying to attach to us in the eyes of the world can be removed.

On the conclusion of the period of one hour allotted for the debate on the motion for leave to introduce the Bill, the business under consideration was interrupted by Mr. Speaker in accordance with Standing Order No. 161.

Question put: That all the words after “That”, proposed to be omitted, stand part of the motion.

Upon which the House divided:

Ayes—95: Badenhorst, F. H.; Bekker, G. F. H.; Bekker, H. T. van G.; Bekker, M. J. H.; Bezuidenhout, G. P. C.; Bootha, L. J. C.; Botha, H. J.; Botha, M. C.; Botha, P. W.; Botha, S. P.; Cloete, J. H.; Coertze, L. I.; Coetzee, B.; Coetzee, P. J.; Cruywagen, W. A.; De Villiers, J. D.; Diederichs, N.; Dönges, T. E.; Du Plessis, H. R. H.; Faurie, W. H.; Fouché, J. J. (Sr.); Fouché, J. J. (Jr.); Frank, S.; Froneman, G. F. van L.; Greyling, J. C.; Grobler M. S. F.; Haak, J. F. W.; Hertzog, A.; Heystek, J.; Hiemstra, E. C. A.; Jonker, A. H.; Jurgens, J. C.; Keyter, H. C. A.; Knobel, G. J.; Kotze, G. P.; Kotzé, S. F.; Loots, J. J.; Louw, E. H.; Malan, A. I.; Malan, W. C.; Marais, J. A.; Marais, P. S.; Maree, G. de K.; Maree, W. A.; Martins, H. E.; Meyer, T.; Mostert, D. J. J.; Mulder, C. P.; Muller, S. L.; Nel, J. A. F.; Nel, M. D. C. de W.; Niemand, F. J.; Otto, J. C.; Pelser, P. C.; Potgieter, J. E.; Rall, J. J.; Rall, J. W.; Sadie, N. C. van R.; Sauer, P. O.; Schlebusch, A. L.; Schlebusch, J. A.; Schoeman, B. J.; Schoeman, J. C. B.; Schoonbee, J. F.; Serfontein, J. J.; Smit, H. H.; Stander, A. H.; Treurnicht, N. F.; Uys, D. C. H.; Van den Berg, G. P.; Van den Berg, M. J.; Van den Heever, D. J. G.; Van der Ahee, H. H.; Van der Spuy, J. P.; Van der Walt, B. J.; Van der Wath, J. G. H.; Van Eeden, F. J.; Van Niekerk, G. L. H.; Van Niekerk, M. C.; Van Nierop, P. J.; Van Rensburg, M. C. G. J.; Van Staden, J. W.; Van Wyk, G. H.; Venter, M. J. de la R.; Venter, W. L. D. M.; Verwoerd, H. F.; Viljoen, M.; Visse. J. H.; Von Moltke, J. von S.; Vosloo, A. H.; Waring, F. W.; Webster, A.; Wentzel, J. J.

Tellers: D. J. Potgieter and P. S. van der Merwe.

Noes—47: Barnett, C.; Basson, J. A. L.; Basson, J. D. du P.; Bloomberg, A.; Bowker, T. B.; Bronkhorst, H. J.; Connan, J. M.; Cronje, F. J. C.; De Kock, H. C.; Durrant, R. B.; Emdin, S.; Field, A. N.; Fisher, E. L.; Gay, L. C.; Gorshel, A.; Graaff, de V.; Henwood, B. H.; Hickman, T.; Hourquebie, R. G. L.; Hughes, T. G.; Le Roux, G. S. P.; Lewis, H.; Malan, E. G.; Miller, H.; Mitchell, D. E.; Mitchell, M. L.; Moolman, J. H.; Moore, P. A.; Odell, H. G. O.; Oldfield, G. N.; Plewman, R. P.; Radford, A.; Raw, W. V.; Ross, D. G.; Russell, J. H.; Steenkamp, L. S.; Streicher, D. M.; Taurog, L. B.; Thompson, J. O. N.; Timoney, H. M.; Tucker, H.; Van der Byl, P.; Warren, C. M.; Waterson, S. F.; Weiss, U. M.

Tellers: N. G. Eaton and A. Hopewell.

Question affirmed and the amendment dropped.

Original motion accordingly agreed to.

The Minister of Bantu Administration and Development thereupon brought up the Transkei Constitution Bill.

Bill read a first time.

I move—

Hon. members will remember that in 1957 we adopted legislation to make provision for a subsidy payable to the provinces, purely as a temporary arrangement. The idea was that a commission of inquiry was to be appointed to inquire into the whole question of the financial relations between the Central Government and the provinces, and in anticipation of their report this temporary arrangement would hold good. Such a commission was appointed and made its inquiry and the commission expects to be able to submit its report during the second half of this year. Unfortunately, however, the temporary arrangement which we made lapses on 31 March this year, and it is, therefore, necessary for the duration of this temporary arrangement in respect of subsidies to be extended for a further period of two years. This will ensure that when the report appears it can be properly considered and that legislation can then be framed in conformity with the resolution which will be taken in pursuance of the report.

We are asking for a period of two years, but that does not necessarily mean that this temporary arrangement will continue for the full two years. If, before the end of the two years, and after receipt of the report and the introduction of the legislation which may flow from it, legislation can be adopted, then this arrangement will, of course, be revoked. We want to be on the safe side, however, and therefore we are asking for an extension of the duration of this temporary measure to 31 March 1965.

The various provinces have been informed of this idea. It has been known to them since August of last year and, in the meantime, in addition to the statutory provision which we have for subsidies, we still have ad hoc arrangements from year to year when a good case can be made out. The purpose of this legislation is, therefore, merely to extend the temporary arrangement to 31 March 1965.

We have no objection to this Bill. As the hon. the Minister stated, it is merely an extension of the arrangement which was made in 1956.

Motion put and agreed to.

Bill read a second time.

I move—

Mr. Speaker, it has always been my aim, ever since I assumed office as Minister of Finance, to bring about reforms in our tax system. The basic principles of that system remained untouched for many years, and the first important step in the direction of reform was the introduction in 1960 of a system of bloc rates and the abolition of super-tax.

The Bill before the House to-day introduces a more radical change than ever before, namely the P.A.Y.E. system. This is, without doubt, the most important and far-reaching piece of tax legislation ever presented to this House since income-tax was introduced in this country almost 50 years ago. Now I can very well understand members saying that the best possible reform I could introduce would be the abolition of income-tax altogether. Be that is it may, I am afraid that in the modern world in which we are living, with more and more demands on the state for expenditure, everybody wanting to get something, that can only be a pipe-dream. I know it lies very close to the heart of many members, but I am afraid they will have to dismiss it—that particular type of reform in which one would say to income-tax, if one had to write an epitaph on it—

That, I am afraid, is out of the question.

The decision to introduce P.A.Y.E. was not lightly taken, and the system we propose to introduce has been designed after the study of similar systems in force in other countries.

The principal change which the system will bring about will be the change-over from the system of collecting taxes in arrear to collection out of current income. Previously tax was assessed and paid after the close of the year in which it was earned. In future it will be collected before the close of the year in which the income was earned. It is not my intention, Mr. Speaker, to explain in detail the mechanics of the system and I will confine my remarks to the more important aspects of the system and the advantages which will flow from its introduction.

It might be as well at this juncture, to refresh our memories in regard to the history of the project since the proposals by the Commissioner for Inland Revenue were first published in the Government Gazette on 12 January, last year. Hon. members will recollect that these proposals were referred to a Select Committee. Extensive evidence was taken from representatives of all types and classes of taxpayers and the Select Committee issued its report on 23 May 1962. The report recommended the introduction of the system and the revision of the original principles in accordance with the principles accepted by the Select Committee and the republication of the revised proposals for general information.

In June 1962, during the debate on the Income Tax Amendment Bill, I advised the House that the Government had decided to accept the Committee’s recommendations and the revised proposals were published in a draft Bill after the close of the session in the Government Gazette on 31 August last.

The publication of the draft Bill brought forth further submissions and suggestions and the Bill now before the House incorporates a number of those suggestions. In addition my department has made a number of alterations in the light of experience gained from its discussions with interested bodies of taxpayers and from numerous discussions within the department itself.

I think, therefore, I can fairly say that this is not a piece of hasty legislation, and that the public has had ample opportunity to study those proposals, if they so wished, before the introduction of this Bill.

Numerous benefits to the country as a whole will flow from the system and the first, and perhaps the most important, is that tax will be collected out of the income as and when it is earned. Not only will the State benefit considerably from the speedier collection of its revenue and the more even flow into its coffers but the taxpayer, and more especially the employee, will derive considerable benefit from the fact that he will no longer be faced with a large tax bill at an awkward time of the year and that he will be relieved of many tax worries. While it has always been expected that a taxpayer should make timeous provision for his tax, it has been the sad experience of my department that in the majority of cases no provision whatsoever was made and in many instances collection had to be effected through the courts or by means of garnishee orders which often led to ill-feeling between the taxpayer and the Receiver of Revenue or between the taxpayer and his employer.

Tax defaulters who in the past have evaded their responsibilities in one way or other, will no longer find this practical and once the new system is introduced, I feel sure that it will go a long way towards providing a more settled and contented labour force in the country.

The self-employed man and the smaller company will also benefit under the new system. They will have to review their position at regular intervals and this will assist them in the planning of their ventures and their financial commitments.

The farmer too will have good cause to bless the new system, for in his case probably more than any other we have the phenomenon of fluctuating income. So often under the present system the farmer has found himself in the unhappy position of having to pay the taxes on the very high profits of a past year out of the small or even non-existent income of the current year. The proposed system will avoid the occurrence of this as the tax will be paid out of the income as and when it is earned.

From what I have said it will be quite evident that a further important benefit to the country as a whole will be the curbing of inflationary trends. Failure to make provision for payment of taxes has meant that the money which should have been set aside for this purpose, has been used for other purposes, very often without regard to the financial difficulties which might result. Under P.A.Y.E. this money will no longer be left in the hands of the taxpayer to give him an exaggerated picture of his financial position and will keep his spending within his means.

At present the Treasury receives the bulk of its income during the period September to March, with the result that during the valley period, April to August, it is often found necessary to raise short-term loans to carry out the State’s normal functions. With an even flow to the coffers throughout the year under P.A.Y.E. the need for these temporary loans will disappear and that will mean a considerable saving of interest.

Tax redemption certificates will no longer be required and the administration costs incurred in connection with the sale and redemption of these certificates and the annual charge for interest will fall away. The tracing of taxpayers will be facilitated and the losses from the write-off of irrecoverable tax will be reduced to a minimum.

The additional cost of the scheme will be more than covered by these savings and the increased collections of tax.

I stated earlier on that P.A.Y.E. would curb inflationary tendencies, but at the same time I am convinced that the introduction of the system will benefit the trading community. In the past there has always been heavy demand for payment of taxes towards the end of the year which has limited the spending power of the wage-earner just before the festive season when the general tendency is to spend more freely. Traders have complained that their sales have been adversely affected and that they have had to wait for payment of their accounts until the Revenue Department’s demands had been satisfied first. In future the average wage earner or salaried person will know that the amount in his weekly or monthly pay-packet is his to spend without the State demanding portion of it at a later date. No longer will he have to utilize his year-end or holiday bonus for payment of his taxes—it will now be available for the purpose for which it was intended.

From all accounts the festive season just ended has proved a bumper season for the trader. This was anticipated, namely that the “tax holiday” provided in the Bill would make available to those prudent taxpayers who always made provision for payment of their taxes an amount estimated at R20,000,000 and reports by the trading community seem to indicate that a large portion of that amount found its way into their tills.

That, Mr. Speaker, gives a general picture of the effect the introduction of P.A.Y.E. will have upon the economy of the country as a whole, and it remains for me to make mention of the more important provisions of the Bill. The explanatory memorandum gives the detail.

Clause 7 provides for the special deduction in respect of what is called the “transition period” following the 1962 year of assessment.

That special deduction will reduce to a minimum the possibility that any taxpayer will become liable, during the year ended 31 March 1964, for payment of tax on more than 12 months’ income. The 1962 year of assessment has been adopted as a practical yard-stick and it is anticipated that most cases will be dealt with under paragraph (a) of sub-section (2) of the proposed new Section 21 bis. Discretionary power has been given to the Commissioner to deal with exceptional cases but any taxpayer aggrieved by the Commissioner’s decision will have a right of objection and appeal to the Income Tax Special Court.

Clause 14 introduces a new Section 89ter which will authorize the Commissioner to consolidate all amounts due by any taxpayer and the interest thereon, if any, in one single debt due to the state.

Clause 18 extends the general provisions of the Income Tax Act to bring the various provincial, personal and income taxes within the P.A.Y.E. scheme to enable the machinery of the Income Tax Act to be used for collection of these provincial taxes as well as the central tax.

Clause 31 does not directly affect P.A.Y.E., but in providing for the consolidation of debts which I mentioned a few minutes ago, it was thought expedient to tidy up the position in regard to outstanding amounts of loan levy for the years 1953, 1957, 1958 and 1959. In respect of these years there are certain taxes and consequently portions of loan levies still outstanding. These amounts consist of small sums due by taxpayers who have had difficulty in paying their taxes. They do not represent accruals of tax as they must be refunded with interest after five years. It is proposed to discharge these amounts of levy and consolidate only those amounts which represent tax.

The proposed Fourth Schedule contains the working provisions of the scheme and I will deal shortly with the more important of these provisions:

Paragraph (1) contains the definitions necessary for the scheme. These are self-explanatory and need no special comment. I would like, however, to direct the attention of hon. members to the definition of “remuneration” which is important.

Paragraph 13 makes provision for the strict control of employees’ tax certificates. It will be appreciated that these certificates could lead to loss of revenue if they got into wrong hands and consequently strict control is essential.

Paragraph 18, sub-paragraph (2) gives certain farmers, fishermen and diamond diggers the option to elect not to be provisional taxpayers. The right to elect does not, however, extend to companies which carry on these operations. The South African Agricultural Union has, I am informed, advised its members not to elect to remain outside the scheme. The consensus of opinion is that in view of the very liberal concession which requires a farmer, fisherman or diamond digger to make only one estimate and only one provisional tax payment each year before the last day of his financial period for that tax year, there is little justification for permitting the exercise of an option to remain outside the scheme. The Select Committee recommended that the option should be given not only to persons who at 28 February 1963, carried on the operations of farming, fishing or diamond digging, but also to all persons who after that date commence to carry on such operations. It is considered that that recommendation goes too far and the original paragraph of the draft Bill has been changed, in paragraph 18 (2) to restrict the right of election to persons who as at 28 February 1963 were carrying on farming, fishing or diamond digging operations and to those who commence such operations between that date and 30 June 1965. This will enable those persons who have made arrangements to commence farming, fishing or diamond digging operations during the next two-and-a-half years approximately and who may be committed financially in respect of those arrangements, to elect to remain outside the scheme if they wish so to do. The number of taxpayers who remain outside the scheme will then gradually diminish over the years. Basically, the scheme is intended to cover the whole body of taxpayers and there does not seem to be any good reason why a small section should be entitled to remain outside its walls for all time. In the draft Bill it was also provided that any person who had elected not to be a provisional taxpayer could, even though his main source of income ceased to be derived from farming, fishing or diamond digging, continue to be a person not required to make provisional tax payment in respect of his main source of income until such time as he ceased to carry on farming, fishing or diamond digging operations. It is also considered that such a concession is unwarranted and paragraph 18 (3) authorizes the Commissioner to require such a person to become a provisional taxpayer. Such change in circumstances (that is when his farming no longer is the main part of his income) will operate only after the Commissioner has, in the exercise of a discretionary power come to the conclusion that the person concerned is unlikely to derive his taxable income wholly or mainly from farming, fishing or diamond digging. Any such decision of the Commissioner is made subject to objection and appeal.

Paragraph 28 deals with refunds of tax where the employee’s tax deducted or provisional tax paid on estimate exceeds the amount finally assessed.

Persons who are not provisional taxpayers, that is employees, will be automatically entitled to a refund of any excess. In the case of provisional taxpayers, however, refunds will not be automatic, as the tax account will normally be in credit and there are accounting difficulties connected with the use of the computer which render automatic refunds impracticable.

As the payment of provisional tax depends upon self-assessment and as deductions of employees’ tax are taken into account in determining the amount of their payment, it is improbable that there will be many over-payments, but if there should be, this will be carried forward for set-off against the next periodical payment.

But the provisional taxpayer can submit an application for a refund where special circumstances exist and the Commissioner will consider the application in the light of the circumstances, and if he is satisfied he may make a refund; i.e. after application has been made. The original proposal of the Select Committee envisaged automatic refund in all cases, but that, as I have said, is impracticable by reason of the computer mechanics. It is my view, Sir, that the introduction of the system envisaged in this Bill will be to the benefit of all citizens and to the country as a whole, and I wish to pay a tribute to the Commissioner, Mr. M. J. Wells, and to all the members of his Department, for the painstaking care with which they have laid the foundations of this scheme, as well as to the Select Committee and members of the public who have co-operated so generously in revising and improving this legislation. I trust that the Department will receive the fullest support from all sections of our population, particularly during the first difficult years of administering the law. From the public I ask patience during the time of teething troubles. From my Department I ask consideration during this necessary period of adaptation. I move.

Mr. Speaker, the hon. the Minister has paid a tribute to the Commissioner for Inland Revenue with which this side of the House would like to associate itself. Those of us who have had contact with him over the years know that in him the State and the public have lost a most conscientious and able public servant, and we wish him well in his job if he sets up as an income tax consultant, where I am sure he will be much in demand.

The hon. the Minister has made out a case this afternoon for this Bill being generally acceptable to the country. I think he has made out a case for believing that the principles of the Bill are generally acceptable. As he has said, it has been before the country in one form or another for some time. It was before a Select Committee for many months, during which time almost every public representative body gave its evidence and mentioned its difficulties and pointed out what it believed to be the shortcomings in the draft proposal which the Committee was examining. As the result of that, I think I can say that all those public bodies, agriculture, commerce, industry and the mines, conceded that the principle of paying while you earn was a good one, and they all indicated that their members were capable of administering such a system, and of course the workers’ associations, the Railways and the trade unions, also gave the idea their blessing. As the result of the work of the Select Committee the Bill to which the hon. the Minister referred was. drastically amended to meet as many points as could be brought up and discussed with the Commissioner for Inland Revenue. It was published in August, as the Minister has said, and we know that since that time representations have been made to the Department. As far as I know, there have been no noticeable reactions against the Bill itself. We know that there has been a very large measure of consultation between the Department and the various bodies like the Accountants’ Society, as a result of which there seems to be general agreement by the people who have to administer this Bill that in the long run it can and should be done.

The proposals in the main part of the Bill to which the Minister referred are mostly administrative or almost consequential on this system being adopted. There are one or two matters which have been brought into the Bill which were not recommended by the Select Committee. There is the one to which the hon. the Minister referred in regard to the farmers’ right to opt out of the scheme ceasing after 1965. Personally I cannot see why that should be necessary. If this scheme works I believe that by 1965 there will be very little desire on the part of any section of the community to opt out of the scheme. If it does not work, of course one does not see why they cannot retain the right which, owing to the special circumstances of the farming industry, the Select Committee thought they should have.

You always have cranks.

I think the powers given to the Commissioner are quite wide enough to allow him to deal with cranks, and I am not talking about cranks now. I am talking about the basic rights of the taxpayer. Certain rights have had to be curtailed and even taken away in the interest of the country at large, but this particular right is one which the farmer should retain. I know that even if the farmer is a provisional taxpayer, very great concessions have been made in respect of him, which I believe will meet his difficulties. I think we will find in due course that the farming community as a whole will come into this scheme, but I do not see any point in now holding out the threat to them that in future they will not have the choice.

Another matter the Minister referred to in his speech was the question of repayment to provisional taxpayers of over-payments. The Select Committee recommended that if a taxpayer in good faith, whether he is a provisional taxpayer or anyone else, overpaid his income tax under this system, he should automatically be entitled to a refund of the credit which stood to his account. But now the Minister tells us that owing to the mechanics of the computer system it will not be possible for the provisional taxpayer to receive that refund. I do not think I can accept that. When the computer, as I understand it, produces the assessment, and there is an over-payment by the taxpayer, by an employee, he will automatically with his assessment receive a cheque for any over-payment he has made during the year. I have to accept that a similar process is not possible in the case of the provisional taxpayer, but I cannot accept that because the computer cannot produce the cheque on the dot the Department is incapable of, within a very few weeks, refunding any amount standing to the credit of the taxpayer. The Minister in the memorandum which was given to us—not the White Paper but the memorandum —said he did not think that there would be very much in the way of over-payment by provisional taxpayers, although he did not give the reason. That may be so, Sir, but I have not the slightest doubt that in the hundreds of different cases that may arise there will be cases of provisional taxpayers who do overpay their income tax in good faith by substantial amounts. The Bill now provides that normally if you cannot be credited with that amount it will be dealt with at the next tax assessment, which may in 12 months’ time. It also provides that you may apply to the Commissioner and that the Commissioner may agree to some arrangement being made whereby it can be taken off at the next provisional payment. I must say that I think that this is being dealt with in rather a departmental fashion, if I may put it that way. The Minister seemed to reveal that temporarily, at any rate, he will have a soft spot in his heart for the taxpayer. I do not know how long that will last, but while it lasts—and I hope it will last until we reach the Committee Stage of this Bill—I hope he will at that stage accept an amendment to that provision establishing the right of the provisional taxpayer to a refund of any additional tax being made. Just how that refund is to be made is a matter of administration, but the principle that a man who has overpaid his tax is entitled to a refund should, I think, be clearly inserted in this Bill.

I have said that generally speaking we agree that this Bill is acceptable to the country and to us and that we shall not oppose the second reading. The main part of the Bill, the meat of the Bill, of course, is in the schedule and there is one point I wish to raise there. I can never understand why the schedule of a Bill should always be printed in such small type that no one can read it. It may be some relic of the past; I do not know, but in this particular case where the whole esesnce of the Bill is contained in a schedule of several pages I cannot see any reason why it should be printed in this way, and I should like the Minister to consider that point and to take steps to obviate that type of thing in future.

Another point in regard to the schedule is that it is always customary in the Committee Stage to put the schedule as a whole, and I should like to be assured by the Minister that when we come to this schedule in the Committee Stage it will be taken paragraph by paragraph.

Well, we are talking about principles, which is always a pleasant thing until you have to try to put your principles into practice, and it is when you talk about putting this Bill into practice that certain doubts do arise. Income-tax is always a very involved subject. The Income Tax Act is amended every year to remedy anomalies which have emerged during the course of the year, and after all these years we still have not got to the stage where loopholes do not have to be closed up every year. As the hon. the Minister said, this is no ordinary Income Tax Amending Bill; this is a revolution. It is a revolution for the taxpayer, as well as for the tax collector. The Minister referred to decimalization. People have said that decimalization works so smoothly that there is no reason why this should not work just as smoothly, but this is a very different matter. Financial houses and the banks saw to it that decimalization worked smoothly. I happened to look at the money in my pocket just before lunch and found I had nine coins, and eight of them bore the head of Queen Elizabeth and were dated well before the date of decimalization, but as far as I know I am not guilty of a criminal offence in still carrying coins given to me as change which are not decimal coins. There is no criminal implication, but here it is a very different thing. This schedule lists 13 offences, for every one of which the taxpayer is liable to a fine of R400 or six months’ imprisonment, or both. As a matter of fact, there are thousands of criminals walking about the country at present who have not been fined R400 or given six months’ imprisonment, simply at the discretion of the Commissioner, as far as I know, because they have all been liable since September. It just shows that in this instance the Commissioner has held his hand. But supposing the Commissioner had exercised his authority and really started prosecuting people, hundreds of thousands of people, for the offence of not registering as employers, just imagine what the position would have been. So much depends on having a Commissioner who does not exercise the powers he has. These difficulties are practical difficulties. We on this side thought when we were on the Select Committee that it would be much better if this system was not introduced until the beginning of 1964, and that it should be introduced into the House now, in the beginning of 1963, and discussed fully, and that 1963 would have been a suitable time really to train the people of the country in the new system. But we were over ruled and I still do not quite know why and what the hurry was. The then Commissioner for Inland Revenue was very insistent, but having committed the hon. the Minister and the Government to this new system he has promptly retired and left the Minister with a baby which may or may not prove to be the flourishing infant he thinks it will be.

The baby will be born only on 1 March.

Yes, and it may even be stillborn. But as I say, these difficulties arise and I want to warn the Minister that I do think we were right and that the responsibility for what may happen in putting this Act into operation will be his.

I think there are three main difficulties which confront the country. The first is in regard to the employers. I do not know whether all hon. members have seen this table of deductions. It is a fearsome-looking thing, not very well printed. It is also in small print. It is a booklet of instructions and a table of deductions telling employers what to deduct every month from the employees’ wages. It seems to me that it is a difficult thing, especially for the small employer, both Whites and non-Whites, and we have to remember that there are thousands of non-White employers in the country to-day, many of whom have not even seen this book, let alone understood it, but who are all expected to start using it in less than one month’s time, under threat of penalties. From all accounts—the Minister will correct me if I am wrong—there are thousands of these employers who are not even registered with the Department yet. I imagine that if they are not registered they will certainly not get the little book of instructions telling employers what to do. The Department and the Press, I know, have been working very hard endeavouring to spread the information and trying to help to prepare the way for the introduction of this new system, but I think the Minister must agree with me that here, within a month of this Bill coming into force, the full impact of what it really entails is very far from having been felt or understood by a very large section of the people who will be affected by it. Talking of that deduction book, another point arises. If the Minister, when he introduces his Budget, reduces the income-tax, that book will be completely useless. There is no provision in the Act for new books to be issued.

But he is going to increase income tax

I would not believe that even of this Minister. But the fact is that the small employer who has been sitting up at night studying this book may find in a month’s time that all his labour has been wasted. I also raise this point that one hopes that the Minister will not use this as an excuse for not reducing the income-tax when he introduces his Budget. The country has been more or less told to expect a reduction in taxation by the Prime Minister, and if the Minister were to come along with this excuse, that owing to this new system of taxation he cannot reduce income-tax this year, he will be more unpopular than Ministers of Finance expect to be, and usually are, because even the Minister will agree with me that if the country has to choose between a reduction in income-tax and this Bill there will be an overwhelming vote in favour of reduction in the income-tax. So I hope the Minister will give us an assurance on this point, that when he comes to frame his Budget, the question of what he does in regard to income-tax will not in the least be affected by anything contained in this Bill.

I will not make use of that excuse.

I know the hon. the Minister is a most ingenious gentleman, but I am only dealing with this particular excuse now. The second difficulty, of course, is in regard to officials. Are there enough officials trained yet to handle this great changeover? There will be tens of thousands of queries from every section of the community, employers, farmers, and lawyers who do income-tax work, particularly in the country, and I know that the Minister will tell us that his Department has been giving courses to its officials, and I am not suggesting that they have not done their very best, but when you think of the position throughout the country and of the tens of thousands of people, particularly in the country districts, miles away from a revenue office, who will be affected by this and who will come along asking for information and instructions and help, I am very doubtful whether the Department and the people who do its work, where there are no actual officials of the Department itself, have had an opportunity of becoming acquainted with the queries they will have to deal with. The Department of Inland Revenue will, at any rate for the next year, it seems to me, have to act not so much as the guardians of the public purse, not as policemen, but as tax consultants who know the answers and who can act as the taxpayers’ friends.

The third difficulty in practice is the enormous powers which are being given to the Commissioner for Inland Revenue. In most every clause in the schedule there are references to the discretion of the Commissioner, the directives which he may issue, and the power he has to deal with almost every phase of this Bill. We know that it is inevitable that the Commissioner should have a measure of discretion. I am not worried so much about the measure of discretion, but what worries me more is in view of the enormous amount of discretion and the directives he will be called upon to issue in the next year or two, whether he can possibly do it. Can he possibly hope to exercise the discretion fully and in such a way that quick decisions will be possible and that the scheme will be able to work smoothly? At the moment, of course, there is no Commissioner for Inland Revenue at all. I wonder whether the Minister in his reply to this debate should not take the opportunity to tell the country who the new Commissioner will be. It is a bit queer that within a month of this colossal task being undertaken by someone who must be a most responsible and experienced man, as I have no doubt he will be, the country still has no idea as to who he will be.

Sir, our view in short is simply this, that we agree in principle with the idea of paying as you earn. We think it is going to be rushed. We think it is unfair to the taxpayer, as well as to the Department, and we think that as the result of this rushing there will be a year of difficulties and confusion, and that the Minister is solely responsible for any confusion and difficulty that may arise. We shall point some of them out in the course of this debate and it may be that we will move amendments in the Committee Stage, and we do ask the Minister to give the most explicit assurances. He has given an assurance in his speech, but we ask him to repeat it. We want to be assured that this scheme will be carried out with the utmost consideration for the taxpayer and the utmost tolerance. We ask the Minister to show the same tolerance and consideration for the points of view which may be put up by members on this side of the House, and if any member puts up suggestions which are practicable we ask that the Minister should give them careful consideration and not refuse to budge, as both he and other Ministers have done in the past when they have received good advice from this side of the House. It depends on the Minister and how he handles this Bill and handles us as to whether at the end of these proceedings we finally give our approval to this Bill.

May I just say in the beginning that we as members of the Select Committee wish to express our appreciation to Mr. Wells for the very intensive study he made of this system now before us and for the information he gave us there and the appreciable measure of co-operation we had from him in the Select Committee. We grant him the rest he will now enjoy, although I think it is really the wrong time to shoulder Mr. Ingram, who is now acting as Commissioner and will possibly become the Commissioner, with the responsibility of acting as the gynaecologist at the birth of one of the largest babies a small mother has ever given birth to. We want to wish him every success if he should be burdened with this task, and we only hope that the matter will be dealt with successfully even though Mr. Wells is not there.

I feel that I have to say something in regard to the Select Committee. We will all agree that there was a good spirit prevailing in the Committee. There was no question of party politics. It was a question of trying to learn as much as possible from the Commissioner and from the other witnesses. We learnt much in the Select Committee, and I think even the Commissioner for Inland Revenue learnt much there. He also made concessions to us on certain points. As the result of that we have a measure before us to-day which is a Government measure but not a party measure. I take it that the parties agree in the main. The principle has been accepted by both sides of the House and that enables one to speak more freely than one would otherwise be able to where one still has points of criticism. I may say immediately, for example, that I fully agree with the hon. member for Constantia (Mr. Waterson) in regard to his criticism in connection with overpayments by salaried persons. I shall revert to that a little later and expand on it.

We have before us here a radical system of reform, and I think the House and the members of this House are to a large extent committed to accepting it. The reasons for that have been expounded by the Minister and have been rehashed so often that I do not want to deal with the reasons as to why this measure became necessary. I can only mention that on the one hand one finds advantages, whilst on the other hand one finds disadvantages. Amongst the disadvantages, broadly, I may just mention that the collection of income-tax will not become less expensive. It will be more expensive; it will cost the state more to collect it, and it will cost the taxpayer, and particularly the employers, more than in the past to ensure that the taxes are paid. On the other hand, the taxpayer will no longer be taken by surprise, as has happened hitherto, by a tax assessment at a stage when he perhaps expected it least, and in many cases at a time when he does not have the money for it. He will now be taxed systematically as he earns his income. The State will also in future no longer, during part of the financial year, have to incur large loans in order to cover its current expenditure, whilst during other parts of the financial year, again, it finds itself with surplus funds which it has to try to invest.

We know that many persons in the past saved systematically in order to be able to pay their taxes. There were persons who bought tax redemption certificates. There were other persons who systematically deposited money in savings accounts, in the post office savings bank and in deposit-taking institutions like building societies, etc. This type of saving which existed in the past will now fall away, and I think it would be interesting, when once the system of P.A.Y.E. is in operation, to ascertain, if it is ascertainable, how many savings accounts which existed, previously have been closed, because that would be a reflection of the number of people who systematically made provision for the payment of income-tax and for whom it will no longer be necessary to do so. The deposit-taking institutions will, under this system, in my opinion, lose a certain amount of income they enjoyed in the past. Their deposits will now decrease. There are many such cases, but the large majority of people made no provision for the payment of income-tax, and it is particularly those people who are being assisted here.

These considerations were so decisive in the Select Committee that we all felt that some system of current payment should be instituted, but I want to say very clearly and unequivocally that there were some of us who were not in favour of this specific system which was submitted to us. There was, for example, the feeling that one should try to reform the system of tax redemption certificates into something much more simple and something which could be exchanged at face value when the person paid his tax, and which would then be credited to the current account instead of to the Ioan account as at present. There was the feeling that it should be made compulsory. That thought was expressed, and many of us were in favour of it, but the Commissioner for Inland Revenue did not want to know anything about that. In the report of the Select Committee he also advanced arguments against such a system. The Select Committee accepted his arguments. I must say that I personally do not agree with all those arguments, but I realize that there are a number of practical difficulties in connection with this matter, and consequently we were practically forced to accept everything which is now before this House.

I also want to say a few words in regard to the evidence. Altogether we had 33 or 34 memoranda before us. Some of the authors of the memoranda gave evidence before us, whilst others did not. Of all of them only the Chartered Institute of Secretaries rejected the system in principle. The others all accepted it to a greater or lesser degree; in most cases accompanied by criticism on particular points, and in other cases by a plea for the exclusion of certain categories of taxpayers. The evidence was very valuable. The witnesses pointed out numbers of defects and practical difficulties in the proposals before the Select Committee, and I am glad to be able to say that the Select Committee was to a large extent able to appreciate the difficulties raised by the witnesses and to meet them in the measure before us at present. On some points we could not find a solution, and those points were referred to the Department with the request that they should be investigated. I notice that in this measure there are certain amendments which do not represent the findings of the Select Committee, but which were added later.

In spite of this study which was made of the whole question of a system of paying while you earn. I feel that there are still many shortcomings. and from the very nature of the matter it cannot be otherwise. It is a completely new system. It is to a large extent an experiment, and a very radical experiment, and it must necessarily still have defects. We would be expecting something superhuman if we expected there to be no defects in the system; we are not perfect. In the course of time many amendments will have to be made to the Bill before it can work smoothly one day. At the moment it is suffering all the pains and in the course of time it will suffer from growing pains, and it will be our task to eliminate these pains in the course of time.

Mr. Speaker, you will remember that I said a moment ago that this is not a party measure and I think it is our duty at this stage, before we reach the Committee Stage, to indicate certain defects and to ask that special attention be given to them before we come to the Committee Stage, in order to see whether we cannot make amendments there. The two matters I wish to raise are, firstly, the position of wage earners. The hon. member for Constantia also referred to them. The problem here is that people who are exclusively wage-earners are consistently being overtaxed from month to month, and then at the end of the tax year, after having sent in their returns, they find they have a credit with the Receiver of Revenue. The reason for this is obvious. The rebates allowed in the tables are in respect of pension contributions and in respect of children, but no deductions can be made in respect of dependants, life insurance and medical and dental services. These are deductions which in many cases may run into big amounts and in fact do so. The result is that we will find difficulty here in the case of people in regard to whom we can least afford to have trouble, namely our workers. There are more than 900.000 wage-earners who are taxpayers. Some of them also have other sources of income, but the overwhelming majority of them have only their wages which are taxable. I should say that there are at least 500,000 of them. I do not think it is right that all these people should be over-taxed. In my opinion this has always been the greatest weakness in this new system. If you study the report of the Select Committee, Sir, you will see that reference was often made to it, inter alia, by myself. You, Sir, have experience of your voters, just as I have. You know that these are people who to a large extent live from hand to mouth. You know how a salaried man, if he is underpaid, immediately tries to lay hands on the amount by which he has been underpaid; he does not want to wait for it because he needs it, and if he does not get it he sometimes has trouble with his wife. Therefore this is a problem which has a psychological background, and that is why I stress it again. We cannot allow a too large amount to stand over to be readjusted at the end of the financial year. It may perhaps be said that this is my personal opinion, but you can study the evidence of every witness who gave evidence before us and you will find that all of them agreed with me when we discussed this matter. I just want to quote two of them here. There is, e.g., the Gold Producers’ Committee. Hon. members will find their evidence in paragraphs 321 to 324 of the report, on page 114. The witnesses here are Mr. Mellor and Mr. Thoms. In reply to a question by the hon. member for Kempton Park (Mr. F. S. Steyn), there is a long reply here concluding as follows—

The next question was then put by the Acting Chairman—

The reply was—

Then I just briefly want to quote the Afrikaanse Handels-instituut. In reply to a question put by me, Mr. Brink, inter alia, replied as follows (page 252, paragraph 522)—

This is clear language and it agrees with the thoughts expressed by the hon. member for Constantia and which I also expressed here. I feel that we cannot afford to quarrel with these people over a few rand. We urged the Commissioner for Inland Revenue to amend his formula somewhat so that the amount will be more or less the same as the amount these people must pay, or so that they should rather remain indebted to the State at the end of the financial year. However, he did not want to listen to this and said that he preferred making a repayment to them rather than to collect small amounts. He told us that he had a machine which would assess these people, and just as a hen lays an egg this machine would lay cheques for the amounts people have paid in in excess, and the cheques would then be posted to them together with the assessment. I now understand that this can no longer take place. I want to point out that in spite of Mr. Wells’ assurance that this machine would simply lay cheques and that the cheques would reach the taxpayers within three months after the end of the financial year, the Select Committee was not satisfied yet and it adopted the following resolution, which was worded very mildly so as not to cause a row. I quote paragraph (26) (b) (iii) of the report, on page xxxviii—

That is what the Select Committee recommended, and we were then under the impression that these people would receive their cheques automatically; now it appears that this will no longer be the case. This is a serious matter and I again want to appeal to the Acting Commissioner for Inland Revenue to devote his attention to this matter before we reach the Committee Stage in order to find out what can be done so that we do not create a problem for ourselves here which will later give us great difficulty. I think the evidence before the Select Committee which I have already quoted confirms that these preliminary over-payments constitute a mistake and that we should try to get away from it. I hope that the Government will devote its special attention to this matter.

The second matter I wish to raise here is in connection with persons who are wage earners as well as provisional taxpayers. Here we have a similar problem to some extent, although not quite. There are many members in this House who earn an appreciable income for taxation purposes here and from whom an appreciable amount will be deducted every month by the Secretary of the House of Assembly, and who have further investments returning them a smaller taxable income than the one they receive here, but still a fairly constant income. These persons have now registered as provisional taxpayers and they must get into contact with the Receiver of Revenue three or four times a year and make payments, and then they must tell the Receiver that he cannot deduct the full amount because the Secretary of the House of Assembly has already deducted a portion of the tax and paid it over to the Receiver. I want these persons to have the choice of making an agreement with the Receiver that their employers should deduct a larger amount every month than provided for in the tables and that under those circumstances they will then be exempted from making provisional payments as provisional taxpayers. In this connection I have a letter here from a person who made a study of the matter and who said, inter alia, that his suggestions were based on years of experience in the pay office of various educational institutions. This person makes an interesting suggestion here. I do not agree with everything he suggests, but he says—

The position in terms of this Bill is that the employer is compelled to deduct the amounts provided in the tables, but even though you or I should ask our employer to deduct more, he can simply refuse. At the same time, if he should agree to deduct more, and the Receiver of Revenue agrees that this may be accepted as a provisional payment, the employee can at any time again ask the employer to deduct the amount stated in the tables, and then the Receiver of Revenue is misled and he will perhaps lose revenue in certain cases. I feel that we should amend Schedule 4 somewhat. It will not amount to serious amendments. In the first place we must provide there that if the employee requests the employer to deduct more than his scheduled taxation, the employer must do so, and if he does so with a supporting letter from the Receiver of Revenue— because I want the taxpayer to enter into an agreement with the Receiver of Revenue to the effect that he will no longer be a provisional taxpayer but that all his taxes will be collected monthly on this basis—then the employer must be prohibited from making any changes to it without the Receiver of Revenue agreeing at a later stage.

And if he loses his employment?

If he loses his employment, he must in any case obtain a certificate showing that he has been paid up to that date. It will make no difference because if he loses his employment he has already paid his tax in the form of monthly payments or an appreciable amount which he perhaps would have had to pay only three or four months later as a provisional taxpayer. I think a provision of the kind which I have now suggested will solve this problem, and it will save many thousands of persons a great deal of trouble, particularly a person with a private income of R400 or R600, together with an income of R3,000 or R4,000 in the way of salary. The ratio is such that it is just a burden to the person to go and register as a provisional taxpayer and then to be taxed three or four times a year and to forward the money for the tax and to submit returns. The greatest difficulty will be experienced in the case of the small amounts, but I should like to see that all persons who are wage-earners and who are also provisional taxpayers should have this choice. The choice should rest with the taxpayer, and if he wants to pay his tax in this way no obstruction should be put in his way; on the contrary, he must be encouraged to do so, and he as well as the employer should be protected by the agreement entered into, because in practice it will amount to an agreement between the taxpayer and the Receiver of Revenue, which is in turn transferred to the employer and to which the employer then gives effect. It is the easiest thing in the world for an employee and for the Receiver of Revenue to go to an employer and to say: In the case of this particular taxpayer you must deduct R25 per month extra and add it to the scheduled amount, and then we will not worry him in connection with the payment of provisional taxation. This position was also put to us by Mr. Wells. Mr. Wells told us very clearly that it could be done, and this is one of the things which influenced us in accepting the system, and I rely on this undertaking given to us by Mr. Wells in connection with that machine which lays the cheques. I feel that these undertakings should be carried out because they influenced us in regard to this whole matter.

I just want to read a question which was put by the Chairman (Question 87, page 28)—

That is quite clear, and it is stated in more detail in other parts of the report. I now understand that the employer need not give effect to the employee’s instructions if he receives such an instruction.

I have now made the two points I wanted to make and I hope that they will receive particular attention by the Department before we reach the Committee Stage of this Bill. As I have said, this is not a party measure and consequently we can discuss matters frankly. I have done so now and other hon. members will perhaps also do so, and we are able to do it because we are dealing with a new system and we are trying to make it as efficient as possible and as acceptable as possible to the voters outside. Finally, I just want to say that I feel that we should devote attention to the few points I have raised but that we should accept the scheme as a whole and give it a chance. It will be our task to assist in improving the scheme in future from year to year, as experience teaches us, so that we will have a scheme which will be as nearly perfect as is humanly possible.

I agree with my colleague, the hon. member for Constantia (Mr. Waterson) that in the main we accept the P.A.Y.E. system. It has been welcomed by most people and I know from personal experience that very great efforts have been made by many organizations and by the Department to smoothe the road which looks as if it is going to be pretty rocky before we get this thing running properly. Most people fear that it is being rushed, and some of these fears can be removed during the course of this debate, I understand. The Minister has said that he intends that the administration will be as sympathetic as possible, but I suggest to him that he should devote a considerable amount of personal attention to this. There are one or two matters that I want to refer to. The one is, if my information is correct, a very important one and that is the position of deserted wives. This matter was brought up in Johannesburg and to my knowledge has been discussed with the Revenue authorities. It is not a question of isolated cases. The information given to me is that in Johannesburg there are from 12,000 to 15,000 women who are deserted wives. In many instances these women have lost track of their husbands altogether. In many other instances the husbands have walked out, have simply jettisoned their responsibilities—as a certain type of man will do—and the women have been forced to take jobs to support themselves and their children. This matter was brought to the Commissioner’s notice and as far as I can make out the only provision made to deal with the matter is that there is to be sympathetic administration. But it seems to me that those women will still have deductions made from their monthly income. I want to limit my remarks to those women whose husbands have actually deserted them and who cannot trace their husbands. The Revenue Office may know where their husbands are but there are the secrecy provisions. The position may and will, however, arise in many instances that when and if the Revenue Department finds an erring husband, tax will already have been deducted from the wife’s pay at a time when she needed every possible penny to look after herself and the children. I do not want to go into details. I know that the officials will say: *Oh, we can fix it all up; when we get the husband we will get the money from him and we will make a refund to the wife in due course.’ But I do not think that goes far enough. I do not see why a woman in that position should pay anything at all until it is proved that she can afford to. I am not pleading that the man should pay everything. I am pleading for the deserted wife who has a terrific battle to feed and educate her children. There are 12,000 to 15,000 in Johannesburg; heaven knows how many there are throughout the country. I say there must be definite provision in this Act that where a woman can prove that her husband has deserted her, she should be relieved of any tax deductions by her employer. There is no other method in which this can be handled without bringing about a lot of unnecessary unhappiness. I do not want to labour the point. I hope I have said enough to prevail upon the Minister to investigate this matter further. I hope he will agree with me that sympathetic treatment is not sufficient in these particular cases.

The farmers have already been mentioned and I can assure the hon. the Minister that from what I have heard recently he will hear quite a lot from them. However, I do not wish to talk about that. I do want to make a suggestion in regard to that long list of criminal offences. Anybody who has had to deal with the Department, as I have on many occasions in the past, will know that there is always sympathetic consideration. But here we are dealing with an entirely new method of collection. But when people see this long list of criminal offences—13 I think—they will become too paralysed with fright to help to get this thing going. I want to put forward a practical suggestion to the hon. the Minister and it is this: The Minister should state in this House that unless it is proved that there has been a deliberate attempt to defeat the Act no penalties will be imposed during the first year of its administration. I think it is a sound suggestion because there is a very great element of fear amongst the people in this regard. There were some other points which I was going to mention, but I think I will rather deal with them in the Committees stage.

We are evidently all agreed as to the principle of this Bill. The House will not expect me to say anything in that regard. We are evidently all satisfied that this new method of payment will be a good thing, for the taxpayer and for commerce and also for the Treasury. Therefore, hon. members will not expect me to say anything about that. But I want to come back to the debate as it has progressed. I just want to tell the hon. member for Benoni (Mr. Ross) that he need not commit this long list of offences. It is quite probable that no taxpayer will be able to commit all the offences mentioned in this catalogue. It is intended for different people, every one of whom is in the same position that he is in. The list is so long because there are so many people. Or rather, it is so long because there are so many facets of tax collection. I think the hon. member is quite correct in what he said about wives whose husbands have deserted them. But I think that is something we can deal with more advantageously in the committee stage.

I will satisfy myself with a few remarks—I will not take up much of the time of the House about what was said by the hon. member for Constantia (Mr. Waterson). He says that hon. members opposite object to what he calls the over-hasty introduction of this new system. He says it would have been better and more advisable if we had educated the taxpayers during 1963 to continue with this system in 1964. I just want to make this remark in that regard: I agree with him that we should educate the people in 1963. But in any case the best method of education is to let the taxpayer—or anybody to whom one wants to teach anything—do the thing himself. Therefore if we were to have waited until 1964 and had used 1963 to give lectures and instruction, we would have got just as far by the end of 1964 as we will be at the end of the tax year 1963. Therefore, we are really saving a year and we are still doing what he would like. There is no over-hastiness, because we have been discussing this subject for more than a year already. He wants this educational measure not only for the taxpayer but also for our good friend the Commissioner for Inland Revenue. Because, he says, there are so many powers entrusted to the Commissioner, so many discretionary powers, that he will possibly not be able to exercise all these discretionary powers in the time at his disposal. Now the hon. member for Constantia and hon. members on his side always object to discretionary powers being granted to officials and to Ministers. We have already become accustomed to that and, therefore, it was really a pleasant surprise to-day to learn from him that he realizes that there must be certain discretionary powers; all he is afraid of is that the Receiver of Revenue will not be able to exercise all of them. The Receiver of Revenue himself said, and gave himself this testimonial, that he was quite capable of doing this work. In any case, that is what he intimated to the Select Committee. I am the last one to say, if he gives himself such a testimonial, that he is not capable of doing it. If he, therefore, says he will be able to do all these things, it is not for this Parliament to tell him that he will not be able to do it.

The hon. member for Constantia also objected to the agreement we arrived at on the Select Committee that all farmers, diggers and fishermen will not always have the choice as to whether they want to fall under this system or under an amended old system. His remark was that if the system is good it is good for everybody, and if it is not good there is no reason for depriving them of that choice. In this regard I want to make only two remarks. In the first place, if the hon. member for Constantia bases the existence of this choice on an agreement, it affects only the people who live at the time when they share in that agreement. Those who come later have, according to the rule of reasonableness, no right whatever to share in the privileges arising from that agreement. We now postpone it to 1965. There is no reason for postponing it any longer for the sake of new people who may come in. If I understood the Minister correctly the people who enjoy this privilege are entitled to it until the day they die. There is a very good reason why we have to do it this way, and that is that any exceptional case always causes trouble in the automation or in the mechanical bookkeeping. It also causes extra expenditure and one of the primary principles of taxation is that the collection of a tax should be as economical as possible. The more deviations there are from the Act, the more expensive it becomes. I do not agree with the Minister that it is only cranks who want to do so; I prefer to say that it is advisable to have uniformity. The sooner we have uniformity the better. Because there are certain people who always believe that the old method is the best we are postponing it until 1965, and thereafter there will no longer be any choice for these people. As I know the Minister, and as I have learnt to know the Receiver of Revenue, if we are able to make out a case in 1965 that these new people who will become farmers, fishermen and diggers must also share in that benefit, I think it will certainly fall on sympathetic ears.

A final point. The hon, member for Constantia does not agree with the Minister, and says that the Receiver of Revenue will not be able, or that it will be very difficult, to make repayments to people who have a credit with the Receiver of Revenue. What he really says is the taxpayers who earn a salary immediately get their money back if they have made an over-payment, but the provisional taxpayer cannot get it back. It is not that he cannot get it back, Mr. Speaker; he must just ask for it. He receives his assessment and sees that he has a credit. The credit may be in respect of a provisional payment he made a week ago. It would surely be foolish for the Receiver of Revenue immediately to repay the money he received a week ago, because that may be a payment which was already due. But because there was no debit there is now a credit. If an amount is to be repaid immediately, even to that provisional taxpayer, we would be destroying our own plan and defeating its object. Therefore it is essential that the taxpayer, if he sees that he has a credit, should himself ask for the repayment of that amount. It is obvious, as the hon. member for Constantia has said, that he may receive his assessment only in 12 months’ time. I can well imagine that when a taxpayer draws the attention of the Receiver of Revenue to the fact that he will submit data only after 12 months to show what he must pay and asks that this amount should be repaid to him, they will not be so hard-hearted as to retain such a taxpayer’s money without interest for so long a period. Therefore he will have a good case every time and the money can be repaid to him. I think that is the only point raised in the debate which the Opposition can discuss. Nor do I wish to go into it further. This was practically an agreed measure, except for these few exceptions about which the hon. member for Constantia does not feel very happy. I want to tell him that there are certain other people who do not feel very happy about it either.

I just want to revert briefly to a point raised by the hon. member for Pretoria (Central) (Mr. van den Heever). He mentioned that on a directive asked for by the taxpayer and issued by the Receiver of Revenue an employer should be compelled to make larger deductions than those he would normally make in terms of the tables. There is much to be said for the suggestion, and I am inclined to agree with the hon. member. The only objection there can be to it is that the amount which is in the hands of the employer will be regarded as a trust fund—and I use the word “trust” in quotation marks. If he were to go insolvent and those trust funds were to be protected, whether by the law relating to trusts or by an amendment of the Insolvency Act which will give the Receiver of Revenue certain preferences to that money, there may also be preferences in regard to any surplus which lands in the hands of the employer or in the hands of the trustee of an insolvent employer. I cannot really advance this as an objection. But, supposing there is such a surplus, it must surely be discovered sooner or later, and if there is such a surplus, it is the easiest thing in the world for the Receiver of Revenue, or even for the trustee in an insolvent estate, to utilize that surplus for the benefit of other creditors. Nor does it mean that the Receiver of Revenue, if he holds such an amount, must retain it. He can repay that surplus, to which he is not entitled. It is quite true that the actio ex causa in debiti does not lie against the State, but there is no obligation on the State to stand by that right it has. Personally I believe that such an action in this case cannot be to the benefit of the Receiver of Revenue.

Having made these remarks, Mr. Speaker, I wish to congratulate the Minister on this measure. On behalf of many people in the country, and particularly on behalf of the small employer to whose interest it is that there should be an equable flow of revenue and expenditure and an equable flow to the Treasury, so that during certain periods of the year a large sum of money is not diverted from the private sector to the public sector, I wish to express our congratulations and our blessings.

When I was more closely associated with the problem of raising funds for a provincial administration, I was often told by experts in this matter that with regard to taxation we should always work to the good principle that taxation should be in a form which was simple to understand and easy to collect. I want to say at once that I do not think that this particular Bill is easy to understand. It may be easy to collect, although I am not so sure about that. The Minister is taking many far-reaching steps to make it easy for him to collect. He is using such a large number of instruments for that purpose, instruments that will be called upon under pain of penalty to do his work for him and to pay for it out of their pockets. We have heard from various speakers to-day that by and large most organizations and groups of people are in favour of the principle of this Bill. That may well be so but I do not think the feeling is as widespread as some of the speakers would make out. May I say that when the Minister replies I shall be grateful if he will tell us whether this Bill in the form in which it is before us was the Bill which was submitted to the S.A. Agricultural Union, because I understand it is not

Yes. They gave evidence.

The hon. member says “yes ”. I suggest that it was not the Bill which is before us to-day. [Interjections.] The hon. member now says it was the principle: that is the point. The principle is one thing and the detailed Bill as it is before us is another thing. Both in the law itself and in the administration of the law, it is not merely the principle which binds us but the details set out in the Bill and in those very extensive schedules to which the hon. member for Constantia (Mr. Waterson) has referred. If this Bill were to be submitted to the S.A. Agricultural Union I do not think it can be said that they will accept it. In fact, Sir, I believe that it goes against one of the points which they made particularly when they gave evidence before the Select Committee and that is in regard to farmers as such. I want to deal with it for a moment from the point of view of the farmer. May I say in passing that I accept by and large that from the point of view of the employee this Bill has virtually no objectionable qualities. If a tax has to be paid and the employee has to pay it then if his employer collects the money on a monthly basis it probably has many advantages from the employee’s point of view. But when one moves away from the employee and you get to the small business and to the farmer who is not only a farmer but has an income from other sources and you run into the whole gamut of human endeavour associated with making a living, you begin to wonder just how in practice this legislation is going to work out. Let me deal with the position of a farmer who in terms of this Bill can remain on the present basis. First of all you must have his income from farming. The greater portion of his aggregate income must be from farming. If he has income from some other source and his income from his farming falls below 50 per cent of his aggregate income he ceases to be a farmer. And a farmer once out is out. You get this position, Sir, that with the embargo at the end of 1965 I can take advantage of that to take by own case as an example; I am so often an example—and opt out. So that I will remain as a farmer; I will carry on with the present system provided that I do not fall under the provision of the law which makes me continue to get the larger portion of my income from farming. But if after 1965 I have a son who wishes to take up farming on my farm then he cannot be a farmer for the purpose of that clause. He will become a provisional taxpayer and he will fall under the whole of the provisions of the Act, whereas I as his father, farming with him, do not. There will be two different systems operating in regard to the same business. Unless I pay him a salary, and then he is not a farmer, then he becomes an employee. But if he wants to be a farmer then he loses the privilege of being able to follow the same course which I followed.

I have known the hon. the Minister of Finance for a long time. He will forgive me if I say that any appeal to his soft heart and to his generosity and that sort of thing will, I am sure, fall on deaf ears. I have never known the hon. the Minister of Finance to have a weak spot or a soft spot or anything of that sort. If the hon. the Minister lends an ear to anything from this side of the House he has it at the back of his mind that some time or other he will take advantage of that. I do not think any appeal to the Minister of Finance in regard to this matter will cut any ice at all. There may be appeals to a present non-existent Commissioner. That I can understand, because the Bill from start to finish is full of references to the Commissioner for Inland Revenue, his powers and his discretion. But even the Commissioner can only act within the broad limits of the Bill. It is true that he has a wide discretion. I realize that in these circumstances that is a good thing because neither the Minister nor his advisers could set out their intention in terms of legal concept in writing in this Bill. They could not do it. They could not grapple with the thousand and one facets of our business affairs which will be presented to the Commissioner for Inland Revenue from time to time by thousands and tens of thousands of people. They could not compile an Act which was going to cover all cases, or even probably the majority of cases. They could follow certain broad lines but apart from that they were completely at sea. What the Minister did then was to say: * We will leave all these other matters to the discretion of the Commissioner; we will give the Commissioner wide powers. He will find an ad hoc way of dealing with this or that problem. We can only foresee the problems, we cannot set out the way in which they should be dealt with.’

Let me come back to my own position and say that I see myself in this difficulty as far as I am a farmer and as far as my son may wish to be a farmer which he does. But I want to go a stage further. Many of the hon. members who have spoken are in the happy position that they either work or have their activities closely associated with a big city or some big centre in an urban settlement. It is not so difficult for those gentlemen to telephone the Receiver of Revenue in their town and put their problems to them. But what is the position of us farmers? I don’t know why, but recently in some of our smaller towns, we are no longer able to deal direct with the Receiver of Revenue in those small towns. In my own case I have to go to the Receiver of Revenue in Durban who is 100 miles away. If I want to see the Receiver of Revenue I cannot just pick up the phone and speak to him. I am talking about the farmers who are in a similar position to myself and I want to see this thing in its practical application. I cannot just speak to him over the phone and tell him I am coming to see him, because he is only just round the corner. I have to get into my car and travel 100 miles there and back. I have to travel 200 miles. That costs me plus minus R20. If the amount that I am questioning is going to result in a saving of tax of less than R20 it is bad business for me to go off to Durban to see the Receiver of Revenue; it is better for me to pay it. I will be saving my time quite apart from saving my money.

As far as my auditor is concerned, as a member of a firm of accountants, what is the position there? The moment I have such a query, I get through to the accountant. By the time I have taken the matter up, which requires the discretion of the Receiver of Inland Revenue and by the time I have asked him to apply his mind to my little problem, which will have come from some centre or other and through my accountant, by the time it has reached him what is it going to cost me? It may cost me anything depending on the type and size of the problem no doubt and dependent upon the time my auditor has devoted to it One of the things that is worrying me about this system is the position in our smaller areas, especially if what has happened in the past should happen again that whereas we always took matters to our local Receiver of Revenue in the smaller towns, these matters have more and more been concentrated in the bigger towns, and if that is done how are we in the smaller centres going to deal with people who in fact can give us advice?

That is the position under the existing law.

That you cannot contact the Receiver of Revenue in a small centre?

We have certain concentration points.

I thought the hon. Minister said “consecrated”, because they are really holy. Mr. Speaker, those of us who are away in the country districts because of the concentration of these matters in the big urban centres have to face up to the fact that our small matters and our small troubles cannot be dealt with in our own centres and our own areas—they have to be taken to the big centres to be dealt with. In that connection I want to make this plea. I realize that the state must get its revenue, must get the proceeds of taxation and that where a tax falls upon the taxpayer, the taxpayer can fairly be expected to pay that tax. I accept that. But where the question of penalties comes in, and the penalties, presumably, are going to be enforced at once, subject to the discretion of the Commissioner, there are many folks, many good folks who will say “Rather than risk a penalty. I am going to pay a little extra, in order to be on the safe side”. They do not want to risk trouble. The penalty, Sir, is not associated with wrong intentions, mens rea. There may be no intention whatever to do wrong, there may be no guilty conscience so far as the taxpayer is concerned, or the provisional taxpayer. There may simply be a straightforward, bona fide misunderstanding as far as the Act is concerned and the Schedule and regulations, and even in those cases a penalty is there. And how do you avoid a penalty? Again by an appeal to the Commissioner for Inland Revenue. Now I want to say that in the case of the small businesses, not only the farmers now, where you have got small people in the country who are hammering out a living, who have to work hard, and who have to make up their own returns, the position is very difficult. In the past they might have gone along to the Receiver of Revenue in their own area to get the thing fixed up; once a year they had to deal with their affairs in connection with income tax, but now in practice they will find that this matter of income tax will be hanging over their heads day after day for 365 days a year; they will never be free of it. It is all very well in the case of an employee who actually has nothing to do with it because the employer deducts the money and that is that. But it is the employer, the man who has to watch his accounts all the time because he is called upon progressively to put in his estimates and so forth, with a penalty hanging over his head. Those are the people out in the country areas who in my opinion who are going to create, perhaps not immediately but in the second stage, the big flood of applications that will be coming in to the Commissioner for Inland Revenue. And the Commissioner is going to act on the assumption that if he can satisfy himself that there was no intention to wrongdoing, that there was no mens rea, will allow for the abolition of the penalty in that particular case. Well, if that is the case, I cannot see how he will cope with it in his lifetime. I do not see how one man can do it in a lifetime. I have not been able to trace any provision that the Commissioner in turn can pass on his authority, can delegate his authority to any other official. I may be wrong, but I cannot find such a provision. I think it would be a very dangerous thing to let that develop. I am thinking of these thousands and tens of thousands of cases.

Now I want to move on to another point. The hon. member for Constantia (Mr. Waterson) dealt with the non-Europeans. That, Sir, is a matter that is going to affect many of us very closely indeed, because there are not hundreds to-day but thousands of these people. What is going to be their position? You see, Sir, it can be the case that if some of these people get into trouble with the Revenue Department, it is going to affect their credit in regard to their business connections, and it may very severely affect their credit. That is going to be a matter of considerable moment in the country districts where Government pressure to-day is building up, deliberately as part of their policy, a group of business people who are non-Europeans. There is one group, the Asiatics, who need no encouragement from the Government. They have by and large taken advantage of whatever the law has permitted them in the way of trading and so forth, and the whole of that group will also come into the picture. I cannot for the life of me see how in the first 12 months, or even the first 24 months, we are going to avoid almost complete chaos because of the number of queries and decisions that will have to be decided only by the Commissioner for Inland Revenue. He will have to send out his directives and their name may be legion.

It is for these reasons that I believe it is a great pity that the matter has been forced through as fast as it has. A lot of people have been led to anticipate that this measure is coming and that at the end of next month it will come into operation. It is very difficult now to turn round and to appeal to the Government to hold over the matter, and in fact it might have even some deleterious consequences for many business people who are anticipating the enforcement of this system. I realize that. Once you have agreed to such a scheme you have to carry on with it. But what I am concerned about are the penalties, and I would like the hon. the Minister in his reply to say what is going to be the position in regard to the penalities, because I can see penalties being incurred on thousands of people who are completely innocent and who have no intention whatever to do anything that is wrong, people who simply do not understand the Bill and the regulations to be framed thereunder.

I would say that this Act was clearly designed for an old established country, with an old established economy and possibly for a country with a homogeneous population in the main. We are not like that. We are a new country, we have got a population that is not homogeneous. In many aspects of our economic life we are a dynamic community. South Africans are up and doing, their businesses are moving, despite of difficulties. But under those circumstances, I must say in all fairness that I believe that this type of legislation is going to create a tremendous amount of difficulty in administration and for the taxpayers.

As far as I am concerned, the position therefore is that I fear that farmers as a group in this country have not understood precisely what is in this Bill, and that when it is put into operation many of them believe that they can opt out of the provisions and that then they will find out that they cannot do so, and that that is going to lead to a great deal of trouble. And I do regret that apparently the hon. the Minister, judging by some of his interjections when my colleagues referred to farmers, has not got much sympathy for them. He went out of his way to say that in any case why should there be a small group of people who hereafter will not be brought within the general run the same as other people—he simply ignored the fact of the peculiar position in which they are placed. I am afraid they will find themselves in great difficulties. I don’t think for example that the Minister or his advisers have as yet taken into account the quota system as it applies in respect of so many agricultural products. I do not think they have taken that into full account into dealing with the taxation system as set out in the Bill. Very often these producers at the beginning of the year do not even know what their quota is going to be, and yet they may have to assess their income in respect of a quota they do not know the size of. I am thinking of that kind of thing. The quota system has unfortunately become part of our economic system in the field of agriculture, and there again the application of the Bill may cause a man to appear as a man who has trouble in respect of penalties, although he had no intention to do anything wrong, and then he may have to go to the Commissioner to testify that what was done was done in innocence and he may have to ask the Commissioner for leniency and to get him out of trouble. I do not like that at all. Simply postpone the penalties for 12 months or more until people have had the opportunity to see how the thing works and until they have got over their initial difficulties.

I am a little surprised at the hon. member, because he is apparently somewhat uninformed. When the commission was originally appointed the farmers were the people who were very scared of this Bill and that was why, when we started, the question was asked as to whom we should call to give evidence and I think it was a number of us farmer members who suggested that not only the South African Agricultural Union should give evidence but that other affiliated bodies should also give evidence, such as the Stud Book Association, the National Wool Growers Association and others. Those bodies appeared before the Commission and that is why I think the hon. member is wrong when he says that we did not investigate the matter properly. I was one of those who was very sceptical originally and who said that I refused to accept the principle until such time as I had accepted the evidence of all interested sections. I must admit that as far as the business world is concerned, I learnt a great deal but what struck me was the fine spirit which prevailed amongst the businessmen. We often think that the farmers form an isolated little group and that we are being neglected but I must admit that the Commission and the evidence given to the Commission was very sympathetic. We said at the beginning that we wanted to retain the old system and even the South African Agricultural Union sided against any change, to my surprise. Their argument was that the farmer never knew before the end of the year what his income was. If you have to make two estimates you may possibly, after seven months, assume that you will reap so many thousands of bags of maize and in the meantime a hailstorm destroys the entire crop. That was why we insisted that we should adhere to the old system, that we should eliminate the various difficulties and that you should be allowed, as previously, to state your case once a year. But after a long discussion and after we had heard what the South African Agricultural Union had to say, and after the South African Agricultural Union had eventually agreed by saying: “If there has to be a voluntary system under which a farmer can submit returns twice, while he can also remain under the old system, let those who wish to submit returns twice do so,” we also agreed. The farmers as a whole accepted it. There is only one small point on which I differ from the Minister and that is in regard to the young farmers. We put it this way that a father, for example, has a son. The father may eventually die and the son is then regarded as a young farmer who has no choice under the scheme. The hon. the Minister has now gone so far as to say that he will extend it till 1965 and if necessary he will extend it further.

He did not say that.

I think the hon. the Minister said that. I think he said that if we asked that further extension be given, if we could put up a good case, he would extend it further.

If a good case can be made out for it.

That was the only point on which I differed. I do not want to go into the position of big businessmen. I think the hon. member makes a mistake where he talks about the small man. Many of our small farmers do not pay income tax. It is true he completes his form but he does not pay tax. Say for instance the farmer employs someone who earns over R400 per annum, then he goes to the magistrate and he pays in respect of that one person. But the general farm labourer does not fall in that category and in that regard the hon. member is probably wrong. The small man does not come under this. If I may give advice to the bigger farmers who farm on a large scale, those people who pay a heavy tax, I should say that the big farmers will be better off under the system which we have at the moment of submitting returns twice a year. I would advise the smaller farmers to remain under the old system. I think the big farmer will benefit by the reduction which he is getting now. True, it is only in respect of one year, but it nevertheless helps. It will be better for him to submit returns twice in order to enjoy this reduction. The smaller farmer who does not pay tax, however, should rather remain under the old system.

I feel it will be generally conceded, after reading the report of the Select Committee on the introduction of P.A.Y.E., that this system has more advantages than disadvantages for both the taxpayer and the State, and I think it must be conceded that on a comparison of the systems prevailing in Britain, in the United States of America, in Canada and New Zealand, our system, as now evolved under this Bill, is certainly less complicated than any of the systems at present in practice in these countries. Credit must be given to the Treasury and its officials for having made such a close study of the other systems, and for having taken out of these systems the things that are best in them and the way they have been applied to our country. That is proved by the fact that 34 organizations and persons submitted memoranda and that a further 20 gave evidence in person. The general consensus of opinion—except of course the Chartered Institute of Secretaries—was that this system should be introduced in our country. Sir, when we look at the diversity of persons and organizations that gave evidence, we find that on one day the “Papkuil-boerevereniging” gave evidence, and the very next day the “Gold Producers Committee of the Transvaal and the Orange Free State”, then it is apparent how diversified was the evidence placed before the Select Committee.

The Select Committee, I would say, made a number of very important changes, both in detail and the machinery for the implementation of the scheme, and thereby removed many hardships and anomalies. For instance, it will be remembered that in the original scheme the penalties for provisional taxpayers were, in my opinion, very severe indeed. The Bill now before us considerably lessens those penalties—for instance the penalty for an under-estimate of tax by a provisional taxpayer was a treble tax, and now that penalty has been removed, unless of course the estimate is less than 90 per cent of the final determination and is less than the previous year.

Another factor which is introduced in this Bill and which I think is to the advantage of commerce and industry is the elimination of the necessity for having a trust account. That has been welcomed right through the country as far as commerce and industry are concerned.

I said that this scheme has advantages for both the taxpayer and the state, but it also has advantages for commerce and industry as a whole. One of the biggest factors, I feel, is the fact that there will be a better monthly spread of income throughout the year, and we will not have the unsatisfactory position that now prevails whereby at the end of each year the employee has a headache in trying to find his income-tax, and invariably has to come to his employer for a loan, afterwards having difficulty in the repayment.

It has been stated that an amount of approximately R1, 500,000 extra taxation will accrue to the Treasury from the introduction of this scheme. I think that is an under-estimation on the part of the Commissioner for Inland Revenue of what will really accrue in extra taxation. Let us, however, accept this amount of R1, 500,000. Against that extra money will have to be found for the collection of the taxation. But the Commissioner himself says that the maximum he thinks it will cost the country to introduce this scheme will be R500,000 in the first year, and in subsequent years that amount will decrease. So the Minister of Finance has got at least R1,000,000 more available this year than last year, and I hope that that will be taken as justification for a reduction in taxation. A further reason why I think there should be such a reduction is the considerable saving to the Government in interest rates. No longer will it be necessary to pay interest on tax-redemption certificates, and the hon. Minister must remember that he is now going to have advance payments of taxation, whereas before he was only getting his taxation in arrear. The fact that a large group of South African citizens who previously did not pay taxation will now be caught in this web, is, I feel, only fair and correct, and that too will amount to a considerable amount of extra taxation flowing to the Minister. But against that I would ask the hon. the Minister to keep in mind the considerable increase in overhead expenditure that is now going to be borne by Commerce and Industry who are now being compelled to become tax collectors for the Government. It will mean a considerable amount of extra work for commerce and industry. I think the point has been taken, but I would like to reiterate this appeal, that the Minister should give consideration to the request by commerce and industry, that some form of commission or remuneration will be made available to them for the collection of taxation on behalf of the Government. The amount that should be set aside is something that I think the Minister and his department can determine by a simple process of calculation. I would also like the hon. the Minister to keep in mind that the money that is now being paid by commerce and industry and individual taxpayers in advance, is money that was previously used in business for financing turnover, purchase of stock and things like that during the course of the year. The very fact that these payments have to be made—by provisional taxpayers three times a year—means that large amounts are taken out of circulation, and at least for the first year this will prejudice commerce and industry as such.

The hon. member for Pretoria-Central (Mr. van den Heever) made the suggestion that a taxpayer could ask the Receiver of Revenue to instruct his employer to make payment of an amount over and above the calculated amount as set out in the table. I would like to suggest that that would be a dangerous course to follow at this early stage in the implementation of the Act, because one of the cardinal points that was taken into consideration in drafting the Select Committee’s recommendations in this matter, was the very need for secrecy as far as an employee was concerned. That is cardinal to all of our taxation principles. There must be no disclosure of any other income an employee as taxpayer may earn, and the very fact that the Receiver can be instructed—if the hon. member for Pretoria-Central’s viewpoint is accepted—to increase that amount by say 25 per cent, would create the very thing that we are trying to avoid, namely any disclosure of a man’s income from sources other than the income from the employer himself.

One of the hidden results of this income tax system which I think has not yet been touched upon, and which I think as the years go on, will become an important factor, is the fact that the Minister can increase taxation by very small amounts on the monthly contributions as far as an individual taxpayer is concerned, without the country as a whole noticing this invidious inroad into taxation. A taxpayer for instance will not notice that there has been an increase of say 10c on his weekly deductions, but that spread over all the taxpayers of this country would be a considerable amount. It is a subtle means, I am afraid, a Minister of Finance could use in future in order to increase taxation.

That also applies if I make a concession in favour of a taxpayer.

I hope that that will take place.

You are not encouraging me.

I hope the hon. the Minister will not be discouraged! Experience has taught us that a scheme of this kind once imposed becomes irrevocable, and although it must be admitted that roughly 90 per cent of South Africa’s 1, 100,000 taxpayers will have had an eight-month tax-free holiday by the end of February—if this scheme is introduced— the other worrying aspect, purely looking at it from a general point of view as far as the country is concerned, is that there are only 78,000 taxpayers who earn more than R3, 600 per year. That is the figure on which the tax free period of eight months has been based in respect of any income of R2, 400. One then arrives at the unhappy conclusion that out of a population of roughly 12,000,000 in this country, only .65 per cent are taxpayers who earn more than that amount. Or if you want to take it as a percentage of the taxpayers of the Union as a whole, only 7 per cent of the taxpayers will automatically have this tax-free period. I think that is something to which we should give consideration when looking at the economic picture of this country as a whole.

The hon. the Minister in his speech dealt with the question of loan levies and their repayment. As is known, these loan levies are repayable at the end of a five-year period. I am wondering whether the Minister would not be wise with the introduction of this scheme, of allowing all loan levies to be paid out right at this stage, the 1st March, 1963. Allow them to be paid out with interest right up to that date. That to my mind, would climate a considerable amount of administration costs for the Treasury and would redeem all outstanding loan levies at this stage. The hon. member for Pretoria-Central (Mr. van der Heever) has dealt with a matter, which I think is of very great importance to the ordinary small taxpayer. I refer to the fact that the salaried man under this new scheme will automatically at the end of each year have made an over-payment of his tax, and only at the end of the year will he be entitled to a refund. I think it is an unsatisfactory feature that a taxpayer should be over-taxed, and have to wait until the end of the year to get a refund of the money due to him. Although I appreciate the reasons why this has to be done, e.g. that the table cannot provide for insurance premiums, for dependants allowances or medical expenses, would it not be better to make him pay only 90% of the amount he has to pay in terms of the tax table? At the end of the year he will then be very near the mark of what he has to pay, or else only a nominal sum will have to be refunded to him. I think the question of a very small refund to a taxpayer is much better than the system now envisaged under this Bill. I fully agree with the hon. member for Pretoria-Central that this question of over-taxation is going to cause dissatisfaction and it is something which I suggest can be handled fairly simply administratively, by cutting the percentage shown on the table down to 90% or 95%.

The question of a provisional taxpayer having to make three payments during the year is something which has also caused a lot of comment amongst commercial and industrial concerns. In order to cut down the expenses that firms will now have to incur in making these payments, I think the Minister and the Treasury should give consideration to the question of making two payments only during the year, instead of three. That would mean that at the end of the first six months the provisional taxpayer would pay a half of what he paid the previous year, and at the end of the year he would then make an assessment of what his tax is likely to be, and would pay in the difference in the same way as the system now envisaged. This would cut down administrative costs considerably, both as far as the employer and the Treasury is concerned if you only have to handle two payments during the year instead of three.

On those same lines, may I draw the attention of the Minister to the fact that the evidence before the Select Committee showed that practically all commercial and business undertakings which gave evidence stated that it was their opinion that the employers as such, and the self-employed person, should have been left out of this scheme for possibly two or three years until such time as the scheme was functioning smoothly, and then only to have brought in the employer and the self-employed man. I am personally of the opinion that that would have been a more satisfactory solution of the problem, but be that as it may, I realize that it is a question of the whole or nothing as far as the Commissioner of Inland Revenue is concerned— looking at is purely from his point of view of administration. The evidence of all these organizations was what they felt that at this stage the self-employed man and the employer should have been left out of the scheme until it was more effectively administered and running smoothly. Having made these comments, and accepting the general principle of P.A.Y.E., I wish to appeal to the Minister to give consideration to some of my recommendations.

Mr. Speaker, we thought originally that it would not really be necessary to discuss the principles of this Bill in any way, particularly in view of the fact that the House has certain recommendations of the Select Committee before it, but particularly with reference to the speech of the hon. member for South Coast (Mr. D. E. Mitchell) I nevertheless think it is desirable to say something about the principles of the Bill.

I personally was rather sceptical about this legislation at the beginning, particularly because one is conscious, or was conscious, of the fact that this major change in our income-tax system, as the hon. the Minister pointed out a moment ago, will also entail certain disadvantages. As has been pointed out it will create a great amount of work in certain respects for the officials, particularly as far as its administration is concerned. It has also been pointed out to us, particularly by people concerned in commerce and heads of factories and businesses, that administratively it will mean a fair amount of extra work to them because under the new system the employer will actually be the Government’s collection agent. In spite of that, all the various bodies except one which gave evidence, either personally or by way of memorandum, supported this legislation in principle as well as the farmers who were represented by the S.A. Agricultural Union. As I say, this change was supported throughout. What impressed me particularly and the reasons why I decided after all that it would be in the best interests of the country for us to change over to this system, are twofold. In the first instance we have the fact which was also mentioned by the Minister, the better distribution of money during the course of the year. I thought, and I still think so, that that consideration outweighs all the disadvantages which this measure may possibly contain. In other words, the position which will prevail under the new system, because throughout the year from the 1st of January to the 31st of December the taxation will flow evenly from the private sector to the public sector, is so important that it outweighs all possible disadvantages. It has been pointed out, and I think this is very important, that under the old system, there was an exceedingly heavy flow of large sums of money from the pockets of the public to the Treasury during the last few months of every year, and in South Africa and in all Christian countries that part of the year is really the part when you expect the greatest activity in your business and that is the time when the money is being taken out of the pocket of the individual. I think, therefore, that it is of the utmost importance to the economy that there should be an even distribution of taxation throughout the year.

The second reason why I think it is of the utmost importance that we accept this system is something which has not been raised by many and that is the question of taxation after a person’s death. Under the new system you have the sound principle that the money is paid as it is earned. In other words, there is no accumulation of arrears taxes. That by itself is a sound principle. Under the old system we found that when a person died, particularly if he had not submitted his returns, a large sum of money must be found from the estate funds in order to pay the arrear income tax. I had experience of that a short while ago in connection with an estate which I had to handle and where no less than R15,000 income-tax had to be paid after his death and the estate was not so big that it did not create very great problems for the survivors. I think, therefore, that it supports the principle that tax should be paid as the income is earned and that in the case of the survivors particularly it will be of very great value that the tax be paid as the income is earned so that in the case of death very little or no income tax will be due.

I want to say a few words in connection with the doubts which are often expressed, particularly by farmers, and as also expressed by the hon. member for South Coast (Mr. D. E. Mitchell). In the case of the professional person, such as the attorney or the advocate or the doctor or the accountant, and in many other cases where income is derived from various sources, you have to make a preliminary estimate of your income for the year. In the case of the professional man he is expected to make an estimate after four months in the year and he must make another estimate later in the year. Every time he makes an estimate he must pay portion of his income-tax based on his estimate. I must honestly say that I think that in many of those cases, particularly where the person derives his income from various sources, and where the professional man will often find it very difficult to know beforehand what his income will be for the year, that will be very difficult. In spite of that no serious objections were ever raised to that. We had many more objections in the case of the farmers. Originally the farmer had to make an estimate a month or two before the end of the year and pay a portion of his tax and at the end of the year he had to make a final estimate and pay the balance. The farmers envisaged many problems in that regard, and quite rightly so, because to a great extent farmers have to cope with the elements of nature which are beyond their control. As a result a concession was made to the farmers in the first instance by way of a discussion in the Select Committee, namely, that instead of his having to make his estimate a month or two before the end of the year, he should make his estimate just before the end of the year. The farmers were of opinion, through their representatives, that that would be very fair and reasonable, because the farmers ought to be in the position at the end of the year, a day or two before the end of the financial year, of knowing what his income was. I know farmers find it exceedingly difficult to handle paper and pencil. They would much rather handle a spade or a tractor and they foresee great difficulty in having to make an estimate of their income. But we said that it could be a very arbitrary estimate. The form to be completed is not a long one; it is merely an estimate in a round figure of what his income will be. This opinion was expressed by Mr. Van Wyk, the under-secretary of the Agricultural Union. After this concession had been made that he could make his estimate just before the end of the financial year he was asked whether he had any objections to it and his reply was—

I am making these few remarks in connection with the farmers because I really want to try to get the farmers not to envisage all these difficulties under the new system, as the hon. member for South Coast did. The hon. member, inter alia, said that the possibility of a penalty being imposed on him will hang over his head for twelve months in the year if he is given the opportunity of making an estimate on the last day of the year. Thereafter he receives his usual form, he completes it, and he can then decide for himself whether or not he has made a good estimate. If he has overpaid he gets a refund and if he has under paid he has to pay the difference. The hon. member is inclined to exaggerate somewhat. I do not think there is any question about a possibility of a penalty hanging over his head for twelve months of the year. As I say, I am making these few remarks because I think we should encourage the farmers rather to cooperate with the State machinery. I personally am of the opinion that it is in the interests of the farmers to join, although as a further concession the choice is given to them to remain outside and to continue under the old scheme. I think it is in the interests of most of them to link up with the machinery of State. Not only is it better for the machinery of State if they are all linked up but I think the farmers will find that it will be more convenient to them to do so.

A few remarks were made in connection with the possibility of over payments and the objections which may possibly flow from that. I must honestly say that that is the only doubt which I really have in connection with this system. I do not want to enlarge upon that; enough has been said about that but I do want to ask that we should try, insofar as it is within our power to do so, to make the system work in such a way that in the most cases there should rather be an under payment than an over payment. I feel that the salary earners are by far in the majority, there are over 800,000, and it would appear that in most cases there will be an over payment. I think that will give rise to a fair amount of dissatisfaction. People will feel that even if it is a small amount it is in the hands of the State instead of in their own pockets. That is nothing more than the human element with which we are dealing and although very big financial implications are not involved, it is nevertheless a factor. Consequently I want to ask that, though it is only done administratively, we should rather try to receive an under payment than that the taxpayer should make an over payment with the result that he feels that he is the loser during the short period before his money is refunded. I have not the slightest doubt that time will show us that this new system will yield very great benefits to the economy and that in most cases it will make the position of the taxpayer easier, particularly that of the 800,000 salary earners who will, as it were, probably have no income-tax problems in future. I feel that if the necessary co-operation comes from the public we will find that South Africa will benefit very considerably under this new system and that it can be introduced very easily.

Mr. Speaker, apart from the Minister’s introduction of this Bill, hon. members on the Government benches have carried very little conviction as regards the reasons why they are accepting this Bill. The hon. member for Ceres (Mr. Muller) said that it was quite easy to claim repayments and he ended by saying that he would advocate that the system rather be one of under payments than over payments. How a matter like that can be rectified I do not know, but I would like to indicate to him, as he mentioned the farmers, the difficulty in regard to an employer employing a casual labourer at skilled work. Such a man is generally paid R3 to R4 a day, which immediately makes the employee liable for income-tax.

Do you refer to piece-work?

Yes. At the end of the year that casual worker is most likely not to have earned sufficient to make him liable for income-tax, but he has to make a return. This is now a Coloured or Native employee, uneducated or semi-educated. He has to make a return and claim for the excess which his employer deducted from his income. It is almost impossible. Take some of the rural areas which are 100 miles from the nearest Commissioner for Inland Revenue. I had a case before I left home of a boy coming to me who was entitled to some refund from the Government and his cheque was made payable by the Receiver of Inland Revenue. It is like the payment of compensation for slaves in the early days! How does this Native know that he must go and draw his money at Port Elizabeth? It will be exactly the same in the rural areas in regard to the farmer employing casual labour at a wage worthy of the man’s labour. It will mean that farmers will have to pay them less, which will put less money into circulation. The farmers must naturally do what they can to avoid the complications of these returns, especially when employing casual labour now and again on skilled work. Now, I am pleased that the Minister has stated that the compiling of hundreds of thousands of new income-tax tables will never debar him from reducing income-tax when the revenue of the country justifies it, but when I look at these tables I do not know. I have my doubts. I fear that income-tax in this country will become more or less static.

Why?

There are hundreds and thousands of income-tax tables alone which will have to be reprinted to cope with any reduction or increase in income-tax which the Minister may find it necessary to impose. The Minister must agree that this is a very complicated system and the proof is the hours and days it took to explain it to members of Parliament before they understood and accepted it. When put into operation it will be one of the most difficult pieces of legislation to carry out. I have doubt whether there will be sufficient accountants to cope with the number of employers of labour who will come to seek assistance. No doubt this measure has received the support it has because it provides for an eight months’ tax holiday. That is the only reason why the Minister has received some popularity in regard to the introduction of this measure. It provides an income-tax holiday. We members of Parliament are induced to become more reasonable if we are offered even a day’s holiday, from our duties, in this House. It has a wonderful psychological effect, and it is this holiday which is making this measure popular in the big centres, but not in the rural areas. I can assure the Minister that this Bill may be popular in the larger industrial centres, but it is not popular in the rural areas.

Why not?

If the hon. member would only attend some meetings in his constituency he would see that this Bill is hateful to the people. There is not a rural town that favours the introduction of this Bill, because it is a complicated measure. The Minister has stated what powers will be given to the Commissioner in regard to carrying out this Bill, and how we can appeal to him. Take even the farmers’ rebate. It may sound very nice to hear about these concessions, but the Minister should realize that we have had droughts recently lasting for three years in some parts, and if the farmer has to calculate his rebate from the drought years, when he had no income at all, his tax holiday will not mean much to him.

Do you want me to withdraw it?

If you put that to the farmers, they will say yes. The Minister had to offer many concessions to the S.A. Agricultural Union to get them to agree to this measure, and when it comes into operation I can assure the Minister that the Union will not be so happy about it.

Business suspended at 6.30 p.m. and resumed at 8.5 p.m.

Evening Sitting.

Mr. Speaker, when speaking on this Bill when the House adjourned for supper, I misunderstood an interjection which was made by the hon. the Minister. I apologize for this. The hon. the Minister asked me whether I wished him to withdraw the provisions regarding a tax holiday from this Bill. I. however, understood the Minister to ask whether I wished him to withdraw the Bill itself.

I have indicated the many difficulties which farmers labour under and it is in this connection that the hon. the Minister made his interjection. Many farmers are not wedded to the principle of a tax holiday and many farmers are going to exercise their right to stay outside the provisions of this Bill as regards their own income. I think the Minister should appreciate the unhappiness which does exist when a large section of the community, such as the farming section, do not wish to be incorporated under the proposed system of tax payment. I should like, however, to warn the hon. the Minister that if the provisions regarding a tax holiday were withdrawn from this Bill, the Government would lose every urban seat it now holds. That is what would happen if these provisions were to be withdrawn from the Bill.

You would be proposing it!

Well, I am not proposing it. I am appealing to the Minister to administer this legislation with compassion towards those who will suffer under its provisions. There will be hardships. Even a Member of Parliament whose Parliamentary allowance with dividends make his income greater than his income from farming and who seeks to be classified as a farmer will encounter difficulties. In other words, a man who has been classified as a farmer all his life, will cease to be classified as such under this Bill if his dividends are in excess of his income from farming. That is something which the Minister should clear up during consideration of this Bill in the Committee Stage.

Then there is the case of farmers who farm as a company with their sons. These farmers shall have to register their sons as employees. In this connection, I should like to ask whether the Commissioner for Inland Revenue will allow this to happen, namely that farmers who farm as a company with their sons, will be allowed to register their sons as employees and in that way dissolve the company. It is just as difficult for farmers who farm as a company to estimate their income as it is for the individual farmer who will now be allowed to make one annual return, assess himself and fix his cheque to his return. This is something which we appreciate—we appreciate this provision, but I do not see why a farmer who farms as a company with his sons should suffer through not having a similar advantage despite the fact that it is just as difficult for them to estimate their income as it is for anybody else.

There is also the question of farming foremen. Many farmers will now have to register as employers and as such make a return every month and by the 7th of the following month pay in with the Receiver of Revenue what they have deducted from their foremen’s salaries. Most farmers include in these salaries a bonus. The Minister has made provision for this in his Bill and I appreciate it. Many of these foremen, however, have grazing rights. I understand the farmer will have to estimate the value of these grazing rights. It is difficult enough as it is to estimate the cost of production, but to estimate the value of grazing rights will be more difficult. Therefore I think farmers should be exempted from this provision. The employee himself should be required to reflect in his return what his grazing rights were worth to him. Similarly, he should be required to indicate the value of his accommodation. It is very difficult for the farmer to say what such accommodation is worth per month or annually to his employees. Much of such accommodation is taken up for farm purposes. For instance, a room is being used as an office, etc. I should say that the value of accommodation on a farm cannot be compared with the value of accommodation in a town. In respect of accommodation on a farm, an employee has to make certain provision for farming needs. I know, for instance, of a foreman who, during a very cold spell, brought all the sheep into his house in order to save their lives. That is part of his farming operations.

It ought not to be difficult for the Minister to provide that the employee should in his return estimate the value of accommodation and grazing rights instead of the farmer doing that in his monthly statement.

I should also like to ask the Minister what percentage of employers his Department estimates has not registered. I understand that no prosecution will take place in this connection, but I should like to ask the Minister for how long this holiday will be extended as regards these unregistered employers.

These are some of the difficulties with which the farming community will be faced under this legislation. I am thankful for the time I have been allowed to raise some of them and I shall be pleased if the hon. the Minister would deal with them in his reply to this debate.

I am not one to argue if there is no reason for argument. However. I cannot but be surprised at the attitude which has been revealed this afternoon by the Opposition. In this connection I want to start by referring to the attitude of the hon. member for Constantia (Mr. Waterson). He was one of the members of the Select Committee which inquired into this matter and was therefore present when each of the problems which he raised here this afternoon was thrashed out. I want to mention a few of those problems.

Firstly, I want to say that I agree with the hon. member where he said that the proposed method of tax collection would revolutionize our tax system. However, he complained about the wide powers which are being given to the Commissioner for Inland Revenue under this legislation. The hon. member was, as I said, present at all the meetings of the Select Committee and was aware of the powers which the Commissioner would be given under the proposed legislation. Moreover, he was also aware of the powers which the Commissioner had under the Act of 1941 and all the amendments to it. He now comes along and pretends that a new principle is being established by this Bill in this respect.

The hon. member also comes to light with the complaint that the officials whom the Commissioner will have to appoint will have insufficient training. This is also a matter of which the hon. member was aware when he was a member of the Select Committee. As a final summing up the hon. member said: “This measure was rushed through”, and said that the United Party would move amendments at the Committee Stage. That is their right, but I want to ask him whether, if he wanted to move amendments, the Select Committee was not the correct place to have moved them so that they could have been discussed? The fact is that the hon. member sat there all the time but did not move one amendment which was not discussed or in regard to which no agreement was reached on the Select Committee.

I want to deal now with those hon. members who spoke ostensibly on behalf of the farmers. I noticed a very interesting fact in this regard. We had hon. members, like the hon. member for Natal South Coast (Mr. D. E. Mitchell) and the hon. member for Albany (Mr. Bowker), who posed here as the great friends of the farmer! I ask myself whether this is not merely a continuation of the old two-faced policy of the United Party, namely, that they are acting in this way so that some of them can go to the platteland and say that they did this and that for the farmer.

Mr. Speaker, I would like to point out, although you yourself and hon. members opposite know it as well as I do. how Select Committees are constituted. Mr. Speaker, the Select Committee which inquired into this matter under discussion was announced by you on 25th January, 1962. I am not going to dwell on those members who represented the Government on the Committee, but I want to refer to those members who served on that Committee on behalf of the United Party, members who were nominated by the United Party whips and also, I take it, by the caucus of that Party. Let us study them more closely. Mr. Emdin was one of them. I do not know what his profession is but I am quite sure that he is not a farmer. Other members nominated were Mr. Hopewell, Mr. Lewis, Mr. Ross and Maj. Van der Byl who describes himself as a “simple little farmer ”. I welcomed his appointment as a farmer to the Committee. Another person who was appointed was Mr. Waterson. A week later, however, Mr. Speaker, you announced that Mr. Emdin and Maj. Van der Byl had been discharged from service on the Select Committee and that Messrs. Taurog and Oldfield had been appointed in their stead.

I want to ask now why the United Party did not nominate the hon. member for Natal South Coast or the hon. member for Albany if they wanted to have the farmers represented on the Committee? There is the hon. member for East London City, someone who knows a great deal about farming and who would have been a good representative of the farmers. No. Mr. Speaker, they could not nominate him because he has already made too many mistakes. He does not know as much about farming as they thought he did!

Order! Will the hon. member now come back to the Bill?

Yes, Mr. Speaker, but I was merely pointing out how the United Party posed here this afternoon as the friend of the farmer and pretended that it wanted to safeguard the interests of the farmer, although it had the opportunity of nominating farmers to serve on the Committee but did not do so— except for the hon. member for Green Point, the “simple little farmer” who is entering the Chamber at the moment and who was discharged from the Committee at a later date.

I want now to come to the hon. member for Albany. He made a general allegation by saying that the farmers were very disappointed— I am quite prepared to resume my seat if he tells me that I am interpreting him incorrectly —and did not accept the P.A.Y.E. system. Am I correctly interpreting the hon. member?

I said that the farmers were not satisfied with this Bill.

I want to ask the hon. member whether he still takes note of the opinion of organized agriculture or not? Do the opinions of organized agriculture still count with him? To judge from his silence I must take it that the hon. member for Albany only takes notice of one or two of his friends with whom he may sit and chat in the shade on a Sunday and that he is not aware of what is going on in organized agriculture circles. Allow me to give him some information in this connection. I have here a bilingual periodical entitled “Georganiseerde Landbou—Organized Agriculture” of December, 1962. On the cover of that issue we find the message: “A happy Christmas and a Prosperous New Year to all our readers”, I want to refer to page 18 of this issue where the hon. member will find this opinion expressed by organized agriculture—

The latest proposals of the Receiver of Revenue in connection with the P.AY.E. system of paying income tax are published in Government Gazette No. 324 of August 31st, 1962. The taxation committee of the South African Agricultural Union has considered these proposals and recommends the following to all farmers—

1. (A) That they should adopt the P.A.Y.E. system because
   1. (1) As employers they resort under it in any case;
   2. (2) It is in the interests of the country’s economy;
   3. (3) The tax-free period holds many advantages and farmers who stop farming must switch over in any case;
   4. (4) After consulting the Commissioner, they do not have to change their financial year.

Is the hon. member aware of this?—

1. (B) That farmers should not alter their financial year;
2. (C) That when estimates are made which are lower than the previous year’s income, farmers should first consult their local receivers of revenue.

   Farmers must clearly understand that this is a new system of tax collection. However, it is not detrimental to the ideal of levelling income and the taxation committee of the South African Agricultural Union continues to pay attention to this aspect.

Mr. Speaker, I think that I am doing the hon. member for Albany an injustice by quoting this article to him because he should have read it himself long ago!

I want to come back to the appointment of the members of the Select Committee. If the hon. member for Natal South Coast or the hon. member for Albany had been on the Committee I am sure that the hon. member for Kempton Park and I would not have voted in the minority alone because they would haye voted with us. I make no apologies for voting against the adoption of the principle of this Bill. Neither do I make any apology for obtaining what I did for the farmers. I make no apology for what I was able to do for them in co-operation, of course, with the hon. member for Cradock (Mr. G. F. H. Bekker), the hon. member for Ladybrand (Mr. Keyter) and other hon. members who served on the Committee with me as representative of my Party

I want to point out that the recommendation of the Commissioner for Inland Revenue was in the first instance that farmers should pay two provisional instalments during the course of the year. The first of these was to be paid in November when the farmer had to pay two-thirds of the tax upon his estimated income for the year, or an amount equal to two-thirds of the income tax which he paid the previous year. Furthermore he had then during the 12 months to pay a further one-third which had to be correct to within 90 per cent of his taxable income for the year. We on the Select Committee felt that this would make the farmer’s position a very difficult one and this also appeared to be the case from the replies to questions which were put to the representatives of organized agriculture. Hon. members know how the income from agriculture fluctuates. I want to point out here that it was not only the farmers for whom we intervened in this connection. We did have other groups of taxpayers in mind whose incomes were just as uncertain as those of the farmers. I am speaking here about fishermen and diamond-diggers. They are also gamblers just like the farmers. We also made representations on their behalf that they should be permitted to pay only one instalment in a year and not two.

Eventually we arrived at the point where the Commissioner as well as members of the Committee realised that it would be extremely difficult to pay two instalments a year. Accordingly a compromise was arrived at which has been incorporated in the Bill now before the House, namely, that farmers, fishermen and diamond-diggers need only pay their first instalment in the twelfth month of their tax-year if they elect to accept the system.

The hon. member for Albany must not come along and tell me how dissatisfied the farmers are and how they will rebel against these provisions. If there are farmers—and I know that there are such cases and I sympathise with them—who do not want to accept the scheme, they can, in terms of the recommendation of the Select Committee incorporated in this Bill, elect to remain under the old system. That will leave their position as it is.

Will it not be necessary for such farmers to comply with the requirements of the Bill in regard to registration as employers?

Oh, yes. We certainly cannot expect to be completely excluded from the operation of legislation for the country. If I am an employer and, as such, employ a White person, a Coloured or an Asiatic earning more than R430 per annum, I am then compelled, as is the case with every other employer— why should I be dealt with differently?—to make a provisional payment for that employee. The same obligation will rest upon me as upon all other employers. This also holds good for a Bantu earning more than R600 per Annum. This not only holds good for farmers, diamond-diggers and fishermen, but for everyone. If this is so, why should I be excluded from these provisions simply because I am a farmer? I do not want to be treated differently to all the other employers in the country.

There is another point that I want to raise. There will still be farmers, fishermen and diamond-diggers who will find it extremely difficult to make an estimate even though it be in the twelfth month of this tax-year. Accordingly, the Select Committee recommended, and the hon. the Minister has incorporated the recommendation in this Bill, that these people could be excluded from the P.A.Y.E. system. There was a specific reason for this. It can be justified. They were not excluded simply because they fell into those categories. There was a recommendation by the Commissioner that all young farmers should accept the system. The Committee felt that if there was justification for the aforementioned three groups being excluded, there was also justification for contending that there would be people in these three groups who would have the same difficulties in the future. Therefore it was recommended that if they elected to stay under the old system, they should be permitted to do so.

If there are such persons, they cannot be expected to participate in the so-called “taxholiday” or “tax-rebate”, which is the term I prefer. I do not think that there is anyone who can object to this. However the Bill makes provision for the termination of this concession in 1965. I want to make my standpoint in this connection very clear. If there is justification for the recommendation of the Select Committee that the aforementioned three groups can elect to accept a different system to that of the other taxpayers, then that justification holds good for to-day as well as for any period in the future. It has, however, now been proposed that this concession should be terminated in 1965. My standpoint is that if there is reason to-day for people to be excluded from the new system, that reason will still hold good in 1965 and thereafter. I put this very clearly to the hon. the Minister and I am now putting it here to the House. If the majority of members differ from me in this regard, I can of course do nothing about it.

My view is therefore that if there are persons —I do not want to call them “cranks”, I do not think that it would be right for me to do so because every taxpayer knows what will be in his best, interersts—who have reason to be excluded from the system at present, those reasons will still be valid at a later stage and they must retain that right.

I want to conclude by repeating that I make no apology for my actions on the Select Committee. I accept this Bill for the reason that the 110,000 farmers who either pay income tax or render returns are tremendously interested in and sympathetically disposed towards the 800,000 employees who also pay income tax and for whom the proposed system will be best because under the old system they did not always have the ready cash available when they received their assessments. I shared the view of the hon. member for Pretoria (Central), namely, that there were other methods which could be put into operation to achieve the same object—for example, a system of redemption certificates and so forth. However. this was not accepted. Under the circumstances I am pleased about the 800,000 taxpayers for whom this new system holds many advantages and I therefore support this legislation.

The hon. member for Somerset East (Mr. Vosloo) has brought a terrific amount of emotion into this proposal to change the method of our taxation. I can understand hon. members showing emotion when the hon. the Minister of Finance wishes to increase the tax rate, but when debating the question of a simpler method of taxation, I find such emotion a little bit difficult to understand. The first thing I should like to suggest to the hon. member is that he should get his facts straight. I was appointed to the Select Committee but never served. He launched an attack on the hon. member for Albany and on the hon. member for Constantia for trying to make improvements to this Bill. In particular he said that as the hon. member for Constantia was a member of the Select Committee, any suggestions he had to make should have been made in Select Committee. May I draw his attention to the fact that after the Select Committee had done its work and submitted its report, the hon. the Minister and his advisers produced a Bill in August of last year. to-day, however, not many months later, a new Bill has been produced and it took the Minister 14 pages of explanatory notes to explain the difference between the Bill of August and the Bill of January. And rightly so, because the Minister, like the hon. member for Constantia, is merely trying to improve the Bill. Therefore I cannot understand the attack of the hon. member.

He also accused the hon. member for Constantia for using the word “revolutionary”, Let me refer him to a motion moved by the hon. member for Kempton Park (Mr. F. S. Steyn) in the Select Committee. He moved that—

And who seconded that resolution? The hon. member for Somerset East!

But I said I agreed with the hon. member for Constantia on that point. You cannot understand Afrikaans.

Mr. Speaker, listening to the hon. the Minister expounding all the benefits which a system of P.A.Y.E. will bring to all of us—to the Government, to Industry, to Commerce and to the individual—I almost felt that he was offering us a gift as bountiful as doing away with taxation altogether. I wonder, however, whether the benefits which we are to derive from this change in the system of our taxation are not debatable. I do not. for example, believe that the small business because of P.A.Y.E. is going to be more up to date and efficient and have more day to day knowledge of his business. I am more inclined to believe that he is going to have some harsh thought on the extra work which this system is going to impose upon him and instead of becoming a more efficient person, he likely to become one of the great estimators of this country. Nor do I believe that the hon. the Minister is correct when he says that this country needs a dose of anti-inflationary medicine. If that were so, we would have expected the Minister to have given a word of warning to those people, including some of his colleagues, who are propounding the theory “spend for prosperity ”. Personally, I am inclined to go along with those who say “spend for prosperity ”.

I think it would be wrong of us on this side of the House not to congratulate the Minister and his staff for the amount of work which they put into this matter. It gave me great pleasure to have been present at a number of symposiums held under the guidance of professional societies and attended by members of the staff of Internal Revenue who gave of their time, their brains and their effort. For that our thanks is due to them. I should also like to thank the Department for the steps which are being taken to acquaint the public with the changes which are going to take place; for the publicity that is being undertaken; for the use of the radio and press publicity. One could almost go so far as to say that the hon. the Minister of Information could learn a point or two from the hon. Minister of Finance on how to publicize things outside the country. Mr. Speaker, although we offer our congratulations, we cannot hide the fact, as has already been stressed, that there are a number of unsatisfactory features in this Bill and in the whole concept of what has been laid before us. The first which has been dealt with already but which must be hammered home is these wide discretionary powers given to the Commissioner. We know that discretionary powers in the hands of a Commissioner is nothing new. We also know that the Commissioner does not like discretionary powers. It is part of this change-over which makes discretionary powers necessary. There are innumerable discretionary powers. Section 21bis contains as much wording on discretionary powers as on anything else. It is true that these discretionary powers in the main will cease as soon as this tax holiday has been completed but there are others that will follow us into perpetuity. For example, the provisional taxpayer in his first two estimates is required to make an estimate of not less than an amount equivalent to the taxable income for the proceeding year of assessment. He can only make a lesser estimate with the consent of the Receiver. So from now until the Bill is changed if a person finds himself in the position of having to make his first or second provisional return for a lesser amount than he would have paid for the equivalent period in the previous year, he must have the consent of the Receiver of Revenue. It is true that the taxpayer has the right of appeal to the special court and thereafter to the normal court but basically he is in the hands of the Receiver, let ns make no mistake about the situation. It has been said earlier in this House to-day that people will underpay as a result of the provisional estimates. I do not believe that that will be the case. I believe that they can just as easily over-pay because of the penalty that is imposed should they under-pay. You know, Sir, there is a certain fear complex in the ordinary citizen of the Commissioner for Inland Revenue and the Receiver of Revenue. It is like when you go to your bank manager in regard to your overdraft. You go there with a certain feeling of trepidation. I hope the hon. the Minister of Finance will one day change the image of the Commissioner for Inland Revenue and that of the Receiver of Revenue, those people who raise certain fears in the mind of the taxpayer. What people are going to do is to over-estimate their income and not under-estimate it because of the penalties that are involved.

Small businesses very often write up their books only once a year. They have no knowledge whatsoever until the end of the year or well into the following year what their profit or loss was. Many big businesses do not get their accounts out before three to six months after the end of the financial year. I agree that from a business point of view it is bad but the purpose of P.A.Y.E. is not to improve the business standards in the country. I should like to ask the hon. the Minister how many extensions of time for payment of tax he is called upon to give each year. Not because that they cannot pay but because they have not got the information to complete their forms. There must be hundreds upon hundreds. Now to expect them to estimate up to 90 per cent of what their income was, is to expect the impossible. Why not one or two months grace? I know that basically the proposals are that we should pay our tax in the period we earn the income. But surely at the 12th month we should be given one or two months in which to determine what our income was during the previous 12 months. Sir, the uncertainty of this situation is bad. I hope that the hon. the Minister together with his Department will be able to find some yardstick in the future with which a man will be able to measure his income so that this uncertainty can be done away with; a yardstick such as turnover, just to take one out of the air.

Secondly, Sir, it seems to me that every person whose income is not entirely straightforward will be asking the Receiver for a directive. For example, if a man was divorced before March, 1962 and he pays his ex-wife maintenance, he will ask the Receiver for a directive as to what he can deduct. If a man earned a salary and commission, but paid his own car expenses and other expenses, he will have to get a directive from the Receiver as to what he can deduct If a man is a commission agent and he employs sub-agents and pays them sub-commission, he will have to return his commission less the two deductions that are permitted and he will have to ask for a directive in regard to the amount he pays to his sub-agents. If a company director receives a reimbursable allowance for entertainment he will have to get a directive. This is all necessary, Mr. Speaker, because only two deductions are permitted, that is contributions to a pension fund and rebates for children. One is not attacking the principle, Sir, one understands the problems. We are trying to help to see if some formula cannot be found. For example, would it not be possible where a deduction has been allowed for, say, two to three years previously to deduct that automatically and save the trouble of getting a directive? There is a further problem connected with directives, and that is that it is the employer who has to apply for the directive. You may well have the situation where the employee does not wish to disclose certain facts to his employer yet he is not in the position to ask for the directive. As I understand the position it has to be made by the employer. If a man is an agent of a company and unbeknown to bis employer he employs 10 or 12 sub-agents, before he can have the sub-commissions deducted he must go to his employer and ask him to apply for a directive to say that he can deduct the sub-commission he pays to his subagents. If I am right in my thesis I think the Bill can be improved in that an employee should be able to apply for a directive direct, and a directive simply in figures not in substance or reason could then be issued to his employer saying “You are permitted to deduct so much from this man’s salary before making your tax calculations”, That brings me to my third point. Sir. It seems to me there is little doubt that on the legislation as it is before us we are going to pay more and not less in the main than our actual taxes. This is a matter that has been dealt with by a number of other members in the House. In the case of a salaried man he will get his refund at the end of the year because he is undoubtedly going to over-pay. He cannot deduct his medical expenses, he cannot deduct his insurance, he cannot deduct any allowance for dependants or any other item except the two expenditures allowed for in the Bill. So he will over-pay. In the case of the provisional taxpayer he cannot make these deductions either and he must wait patiently for a refund one day although he has the right to apply. It seems to me wrong in principle that the average taxpayer should be a permanent creditor of the Government of the Republic. I think it was rightly said that rather pay a smaller amount and let the Government collect the final amount than that we should all be creditors of the Government. There are a number of other matters which crop up. There is the problem of those people whose incomes fluctuate and who are near the deadline for tax. There is the problem of persons who receive housing and/or rations. There is the problem of whether a commission man is an agent or a principal. I have read much on this question of P.A.Y.E. and on this question of a man who earns a commission there seems to be an enormous amount of conflict because some say you must deduct ten per cent—that was in the Cape Times, I think—whereas others say he is a principal. I would ask the hon. the Minister to have this point clarified. There are tens of thousands of people employed in the Republic who work on commission and commission only. I think it should be clarified very quickly whether they are principals or agents.

Mr. Speaker, we have complete sympathy for the hon. the Minister and his staff in this vast problem they have undertaken. I hope that the criticism we have made so far has been in the spirit of helpfulness, if the hon. the Minister cannot deal expeditiously with all those matters that are going to arise under P.A.Y.E. There are many he knows nothing about at the moment and many that we know nothing about. We hope, however, that in setting up this vast change he and his Department have made all the changes that are necessary to absorb the work and the problems If they do that, as we hope they will, we will be happy to come back to this House and compliment them once again as we have done any times from this side of the House on the preliminary work that was put in. But if they do not it will not be the Department on whose neck our criticism will fall but that of the hon. the Minister.

There is only one other suggestion I would like to make. With all the vexed problems that will be arising constantly, the taxpayer, and particularly the professional man who deals with taxes, will be thirsting for information. We know that the Department issues many rulings to its own staff. In the main those rulings are completely unknown to either the taxpayer or his adviser. I would like the hon. the Minister to consider whether where matters of that nature come before the Department and departmental rulings are given and there is no real need for secrecy as an internal matter, those rulings should be made available to the taxpayer and his adviser. I think if that is done it will save not only the taxpayer but the Minister and his Department many a day of headaches.

Every speaker who has spoken so far in this discussion has stated first the good principles involved in this Bill and all have gone on afterwards to draw attention to the many difficulties that will arise. They have put forward various suggestions for improvements to be made. It seems to me that the point is to weigh up the advantages in the principles and the many disadvantages not only to the Government but to the taxpayer who will have to face these many problems. The hon. member for Ceres (Mr. Muller) maintained that the benefits to be derived from the even spread of money throughout the year outweighed all other disadvantages. It seems to me that that hon. member has lost his sense of proportion in putting that forward. The amount that will be spread in that way is limited to the small amount of taxation that is paid by a small number of the taxpayers of the community, particularly those who are the smallest of the taxpayers. Therefore the point that he makes that this outweighs all other disadvantages is quite a minor consideration. I think his sense of proportion has gone all wrong. I think there are many much more weighty considerations that we should take into account. It seems to me that there are really only two benefactors from this Bill. The main benefactor, of course, being the Government and the wage earner. The question as to whether the wage earner will reap any benefit is quite a moot point. I was particularly interested in the remarks of the hon. member for Pretoria (Central) (Mr. v. d. Heever) who was actually the chairman of the Select Committee. He drew attention to the fact that the wage earner would be over taxed throughout the year; that he could have been drawing interest on the money which he has paid to the Government. I was particularly struck by his statement that many difficulties had been presented to the Committee, that the Committee had put forward many difficulties but that eventually the Bill had been accepted under pressure. [Interjections.] The word he actually used was * dwang ’. I made a note of the word as he used it. I feel that the benefits in this case are almost entirely with the Government. They will get their taxes in earlier; they will receive interest on the taxpayer’s money in advance; the employer will act as tax collectors for them; the employers will be the buffer between the Government and the taxpayer.

The extra amount which the Government will collect, to my mind, is really very inconsiderable in comparison with the many disadvantages which this method of taxation will bring about not only in the additional work which will devolve upon the tax collecting department but to my mind it is the inconvenience to the country that we must really take into account. Some of these have been raised in the Select Committee.

A number of speakers have given the impression to this House that nearly all the bodies that gave evidence before the Select Committee had supported the scheme. I find, in looking at appendix B * Summary of the Opinions Expressed in Representations submitted to the Committee ’, that a great deal was said against it. The scheme was rejected entirely by the Chartered Institute of Secretaries. “Support the introduction of the scheme for employees but are opposed to its extension to self-employed persons and companies” included the Association of Chambers of Commerce of S.A.. the Steel and Engineering Industries. South African Motor Industry Employers Association, National Federation of Building Trade Employers, S.A. Federation of Civil Engineering Contractors and the Joint Council of the Societies of the Chartered Accountants of South Africa. All those supported the scheme only in a very qualified measure and considered that the benefit of being excluded from the scheme should be extended to many others besides farmers.

Then I find that a number of others considered that farmers, short-term insurers and professional men should be excluded from the scheme. Those included the South African Agricultural Union, the National Wool Growers Association, the Umfolozi Co-operative Sugar Planters, the Insurance Councils, the Societies of Cape of Good Hope and Transvaal Law.

Some supported the scheme in principle but considered that the implementation thereof should be postponed to afford an opportunity for further study. These included the Gold Producers’ Committee of the Transvaal and Die Afrikaanse Handelsinstituut. “Memoranda confined to criticism of certain of the administrative proposals ”—South African Insurance Employers Association, Association of Pension and Provident Funds, South African Trade Union Council, Cape Society of Accountants and Messrs. Goldbly, Panchaud and Webber. So by far the largest proportion of those who gave evidence were either opposed to the scheme or gave it very qualified support or considered that the benefit of being excluded from the scheme should be extended to others besides farmers.

I find that there are many other new considerations besides those put forward by these bodies who gave evidence and I want to refer to one point raised by the hon. member for Albany (Mr. Bowker). He pointed out a number of the difficulties that farmers will have to contend with. I maintain that one of the points he raised applies in a great many other directions besides the farmers. That was the point that there will be many small contractors or workers who work for a short period at a wage which is above the rate of R600 per annum but who do not work the whole year. So after the employer has submitted their taxation it will be found that they were not required to pay tax and they will be put to a great deal of trouble in getting a refund; in many cases they will not get it back at all. I think that is one of the basic difficulties that will be encountered. a difficulty which will increase and not diminish within the next few years as this scheme is put into operation.

As was said before, this scheme was taken over from highly developed countries. In those countries practically every worker, skilled, semi-skilled and unskilled, are all in the taxation ranks. Whereas here in South Africa four-fifths of the workers, mainly the unskilled workers, pay poll tax and do not at present fall within the range of this new scheme. These workers will now gradually work up into the range of this scheme. Gradual increases in wages will bring these people into the scheme and more and more we will have the difficulty of people falling within the range of the scheme for two months in the year and then not qualifying by the end of the year. That will greatly increase the difficulties of those who employ them. This fact will be emphasized and intensified by the Government’s policy of migratory labour.

That is a point which has been left out of account; I have not heard it mentioned anywhere. Those people work for short periods and are away from their work for the balance of the year. The irritations involved with that will increase from time to time. I feel that that point alone is one of the major points which will make it difficult to apply this Bill and which is going to cause more and more irritations. I feel that whatever good principles this Bill may possess it should have been left over until the labour of South Africa was on a more permanent and settled basis. It could then have been introduced with similar conditions as apply in the more developed countries from which we have taken this legislation. I feel that that position might possibly have been reached in some 25 years’ time and that this Bill has been introduced altogether prematurely.

Mr. Speaker, I listened carefully to the Minister and I could not find any reason why this Bill should come into operation this year. Why the rush? I suggest to him, as has been suggested before, that there are very few receivers of revenue in the countryside who understand this Bill. Our unfortunate magistrates are the most overworked people and their officials and their offices are very heavily over-worked. They are the people who will have to explain this scheme to us. I wonder how many of them really know the full implications and the workings of this Bill. I have an auditor who belongs to a firm with a world-wide reputation. About a month ago I asked him for advice and he could not give me the full details. Tomorrow I am fetching my farm manager to have two or three hours’ discussion with him. He has not got the forms and the books yet so as to explain the position. We suggested in the Select Committee that it should be introduced next year. This unnecessary haste will create nothing less than chaos and confusion throughout the country. From the 1st of March we are all going to become unpaid civil servants. At the end of the following March we will still be servants but I wonder how civil we will be after we have done this job. Think of the extra expense. Practically every farmer will now have to employ a bookkeeper to make his returns. We suggested that it should be deferred till 1964 so that the officials—I am not talking about the very senior officials— could get more accustomed to the whole idea and understand it better. As my hon. friend said just now in great industrial countries like Great Britain people earning from £100 upwards have to pay tax. They have grown up with it; they have seen it develop; they have lived with the scheme. We have hundreds of thousands of people in this country who are not fully educated or partly educated and who do not understand this scheme. You do not employ those people under contract. In other countries they would be under contract to build a dam or a shed, but here you simply employ them by the day because they do not understand a contract and do not know how to work out the cost or their pay. Those people are going to suffer grave injustices. The hon. member for Somerset East (Mr. Vosloo) referred to me as the, eenvoudige boertjie’. I will rather be a, eenvoudige boertjie’ than a ‘politieke boertjie’ like all those members over there. On the farm the farmer often hires a man to put up a building. You hire him for a month or two and you pay him R3 per day. At that rate he gets R78 per month which is about R936 per annum. You will have to make a deduction in that catogorie of income and pay it over to the Receiver of Revenue, though a full year’s income might be under R400. True he gets a certificate to show that he has paid; it is true that he can ask for a refund. But with the amount of work that the officials will have to cope with when is that man going to be refunded? He might be out of work for the next two or three months; what does he eat in the meantime? That is one of the points which I think is most important. I an concerned about the unfortunate man who cannot protect himself; who does not know how to go about this business. I feel that those are the people who have not been considered in this matter at all. You try to get a refund on a railway ticket and you will realize how many months that takes. These people will have to wait so much longer because there are going to be so many claims on the officials’ time.

Another point is the value which is placed on free food and housing. I should like the Minister to give us some idea as to how that is going to work. I have tried to find that out from various sources but have been unable to do so. The value which is placed on his house and food may well bring him into the tax-paying category. It is an important matter. to-day I build a house of at least six rooms for the Coloureds on my farm. In a town that would be let at about £12 or £15, but it is not worth that on a farm. The same applies to his rations, his meat etc. It largely depends on whether the Government is going to place a value on that or whether the farmer will do so. Then you come to the man who shears once a year. In our area they shear from August to September/October. He has made his estimate for his income. But in December his wheat crop fails and he finds that he cannot meet the interest on his mortgage or he has to buy certain essential machinery. So he decides to shear short wool in March or April. In other words he gets a year and a half’s clip in one year and a half a clip the next year. He will be hopelessly wrong in his estimates because an unforeseen contingency arose. That is a very serious matter. When the farmer made his estimate he had no idea that it would be necessary for him to do that in the near future.

What worries me too are the terrfying powers which are being given to the Commissioner for Inland Revenue. I deal with Bellville and I have found the officials there very courteous and very helpful. If they find that you are not out to evade taxation they will help you in every way possible. You will remember, Sir, some time back the Commissioner for Inland Revenue added a Schedule I to the income-tax forms. In that Schedule I you were called upon to say how you spent your money in the last year. Sir, who can remember whom you tipped or whether you backed slow horses. My view is this that once you have paid your taxes what little remains over belongs to you and you can spend it as you like. But he actually added that Schedule I. Pressure was, however, brought to bear on him and he was made to withdraw it. But that gives you an idea of what a man can do if his powers are too great. Therefore I say that these terrifying powers are almost worthy of a dictator. It is a dangerous thing. There is no relief; you cannot argue, you cannot refuse to pay, you cannot go anywhere else to defend yourself; you are in the hands of the Commissioner of Inland Revenue. I think that these penalties which can be applied to perfectly innocent people are very serious and I do hope the Minister will consider it very carefully, anyhow for the first year.

The hon. the Minister in introducing this Bill said that he was a reformer on taxes and he said that he enjoyed the role of the reformer. The hon. the Minister will know of course that the role of the reformer is a hard one and during the course of this debate we on this side of the House, while agreeing to the Bill in principle, have been endeavouring to show the Minister some of the difficulties he will have to face. Members on the Government side have tried to reassure the Minister. Time will tell during the next twelve months whether those difficulties we foresee will so easily disappear. At this point I would like to take exception to the remark made by the hon. member for Somerset East (Mr. Vosloo) who suggested that the farmers were not represented on this side of the House on the Select Committee. Mr. Speaker, we were appointed on the Select Committee to deal with taxation and I challenge that hon. member to show that in respect of any point during the whole course of that Select Committee our side was not prepared to look after the interests of the farming community. This Bill was discussed objectively by all sides, and if you look through the voting that took place from time to time, you will find that the voting was not on party lines, but on the merits of the subject before the Select Committee.

The Minister, I think, will concede that one of the reasons why he has got so much support for this Bill outside is because of the tax holiday. Might I suggest that if he wants to achieve success in the administration of the Act, he would be wise not only to grant a tax holiday but also a penalty holiday. Reference has been made from time to time during the course of this debate to the very wide powers of the Commissioner for Inland Revenue. Hon. members have referred during the course of the debate to the farmer, to the small businessman, but no reference has been made to the ordinary salaried worker, and it is the middle income group who, I fear, are going to be caught by the incidence of this Bill. You see, Mr. Speaker, there are going to be many workers who earn a moderate salary and whose wives are working in factories or in offices, and for reasons best known to themselves, possibly because they thought they were clever, they have not disclosed their wives’ income. They are going to be caught up under this new arrangement. The wife’s deduction will be made by the employer concerned, the husband’s deduction will be made by his employer, and then the Commissioner for Inland Revenue will discover that these people are showing their income at the end of the term, and the Commissioner for Inland Revenue will then say: “Mr. So-and-So, over the past year income is shown in respect of yourself and your wife, but in previous years no return has been made of the income of your wife. Did your wife work?

What is wrong with that?

He may find that the wife has been working in the past but that there has not been a disclosure of her income. The Commissioner for Inland Revenue has the power to go back over several years. The Commissioner knows that he has these powers and he has also the power to exact penalties. I think the Commissioner for Inland Revenue could take a leaf out of the book of the Minister of Justice. The Minister of Justice knows that it is illegal for certain people to have fire-arms, and so for some time past he has closed his eyes to the law and has given people a certain time to register their fire-arms. In that way he has been very successful in getting unlicensed fire-arms registered. I suggest that if the hon. the Minister wants this Bill to work, there will be many cases of people who have been dodgers in the past and who will be terrified of having their past exposed, and this will be an opportunity to close that whole gap. I suggest that if in a case like this the Minister will give a penalty holiday, he might be more successful in getting the administration of this Act working smoothly and quicker than he would in the ordinary way.

This Bill provides for a reform and as the hon. the Minister says will also enable him to collect his taxes monthly. It will also have this advantage that we can expect better budgeting from the Minister in future. As the ordinary taxpayer will have his tax deducted each month, the Commissioner for Inland Revenue will have monthly collections of tax and we will expect better budgeting from the Minister. He will know his monthly expenditure because this House will have approved of such expenditure in advance and he will know his monthly revenue because he will be collecting it monthly. May I say that I hope the Minister will discourage the Commissioner for Inland Revenue from making the year end for all companies on the 28th February. I submit that as taxes will be collected monthly from employees and as employers and companies will be encouraged to give an estimate in advance, it is a matter of indifference to the Minister when the year-end of a company is. Because if he persists in the practice of the past of making all companies as far as possible end on the 30th June, it is only a matter of time before he gets the same bottleneck at the end of February as he has had at the end of June.

Under the Bill they have got a choice.

That is so, but I hope that as they have a choice, pressure will not be brought to bear on them by the Revenue Department to discourage them from maintaining the old year and that persuasion will not be employed by the Minister’s department to get companies to end on the 28th February. If it is the attitude of the department to try and persuade people to end the financial year at the end of February to suit the convenience of bookkeeping, then it is only a matter of time before we have another bottleneck again.

This Bill is also discriminatory. It discriminates between different types of taxpayers. There are reasons for that which have been shown during the course of the debate. There is, however, one discrimination I fail to appreciate and that is where the Act makes a difference between farmers and farm companies. The farmer has an option, but a farm company has no option. A farm company has to be a provisional taxpayer e.g. you might have a man who leaves his farm to his three sons who decide to form a private company to save arguments and discussions later on. They register themselves as a private company in which the three sons are equal shareholders, with the understanding that if at any future time any transfer has to be effected, it will only be a matter of transferring shares. In effect, that is virtually a farming organization, but under this Bill as it stands a farming company will not have the option which the farmer gets.

Would your argument also apply to fishermen and fishing companies and to diamond-mining companies?

The farmer is given a special privilege and a farming company which is only interested in farming operations is discriminated against. I see no reason for such discrimination. I hope the hon. the Minister will give me reasons for this discrimination. The hon. the Minister knows that when it comes to diamond-mining companies, you do not have a solitary individual who goes and digs his own diamonds. Fishing companies is also a different matter. If you have four or five fishermen who form a private company, the same would apply. The position is different from a farming company which is a proprietary company consisting of three or four farmers who are virtually the only shareholders as against a farming company which is an investment company. A farming company which is an investment company is analogous to the diamond company or a fishing company in which public money is invested. I suggest that where a farming company is only a proprietary company and the only shareholders are individual farmers, some consideration should be given.

This Bill deals with reforms and the main reform is going to be tested in the hard school of experience, and while we could discuss various examples for a considerable time, it is only in actual practice where difficulties can be ironed out. We cannot foresee all the difficulties which will crop up. A number of difficulties have been foreshadowed. Many members have allowed their imagination to run wild by quoting various examples, and we have tried to anticipate many difficulties. But there will be other difficulties and the solution thereof depends largely on the attitude of the Department of Inland Revenue, and the attitude of that department will depend largely on the attitude of the hon. the Minister. I counsel the hon. the Minister to have a penalty holiday of at least twelve months, and to deal with this Bill sympathetically if he wants it to be a success.

I want to commence by thanking hon. members very heartily for the varying degrees of support they have given to this Bill. It reminded me of the story about the Scottish farmer. His wife could not go to church that morning because she had to cook, so she told him, “Sandy, you go, then you can come and tell me what the parson preached about.” Sandy went and when he returned she asked him, “Do you know what the text was? ”. He said, “No, I don’t.” She asked, “What did the parson preach about? ”. He replied, “Sin ”. “But what did he say about sin? ”. Sandy scratched his head and said, “I gathered he was against it.” I am now under the impression also that hon. members opposite are not against the Bill but in favour of it. And on my own side of the House also, as I read the debate, the principle is generally accepted that everybody is desirous of making improvements to the Bill. In that respect I welcome the remarks made here, all the suggestions for improving the Bill. I accept it in that spirit.

It will now be very clear to you, Sir, that it is very difficult for me again to draft the whole Bill de novo as a result of the suggestions made here. That is almost an impossible task. Before replying to specific questions, I just want to deal with a few points.

The first point I wish to make is that this Bill breaks new ground. It is true that there i> such legislation in other countries, but this Bill is different from the legislation in other countries. I am glad to learn from the hon. member for Springs (Mr. Taurog) that this Bill is less complicated than the laws in the United States, the United Kingdom, New Zealand and Canada. It was in fact our object to make this legislation as simple as possible, simple to understand and to make it easy to collect the taxes. But the qualifying words here are “as possible”, It is not something one can oversimplify. and therefore I am glad to hear the tribute from the hon. member for Springs that the draughtsmen of this Bill succeeded in making it less complicated than the laws in other countries where this experiment has been made. But it still remains an experiment, and from the very nature of the matter there will be shortcomings in this Bill. There will be shortcomings and after experimentation, after gaining experience in the hard school of practice, we shall have to decide how it should be remedied. It is no use having discussions here for hours as to what we think is best. Now is the time to pass the Bill and then during the first year or more to see what the defects are in practice—not as we thought or argued, but what are the defects in practice, and then it will be the time to come to the House to ask for this or that amendment.

It has been suggested that we should wait another year. Do you know what the position will be if we come with it again in a year's time? The people will not in the meantime have become cleverer in regard to this Bill. There is a very important principle in pedagogy, and that is “learn by doing ". By doing a thing one learns much more about it than merely by discussing it, and if we put this Bill on the statute book everybody in the country will know much more about it and its implications in the next year than they would have known if we had said that we would give them another year in which to study the Bill. That is simply not human nature, but if they are placed in the position where they have to apply it in practice they will, in their own interests, learn much more about it in this period, and then we can come back at the end of that period and see what the defects are and how they should He remedied.

The second point I wish to discuss is the fines referred to.

It has been asked from various sides that the Commissioner should be somewhat conciliatory and lenient and that he should not demand his pound of flesh in very case. To that I want to reply immediately that as far as I am concerned it will be my instruction to the Commissioner and to the various Receivers of Revenue not to impose the fines in every case where the person, the taxpayer, can satisfy them that the mistake he made was a bona fide one. I do not want us to grant a complete holiday from fines, because the fines have a wholesome effect on the people who consciously and deliberately make mistakes. Therefore I want to put it this way. that the fines should be there because otherwise there will be large-scale evasion. But in every case where a fine could be applied but where the person to whom it would have been applicable is able to convince the Commissioner or a Receiver of Revenue that his mistake was not made deliberately, the Commissioner or the Receiver will act leniently. We realise, and I am sure the Department will realise, that we are now entering a period of adaptation for this new legislation, this new system we are applying, and that in fact it is a school, and whilst one is still learning one should not be treated as strictly as when one has finished school and has started practising. I do not only want them to adopt a sympathetic attitude in respect of fines only. I also want the Department in other respects to be as conciliatory and as sympathetic as possible during the first year. They should not become impatient with people who make a mistake here or there, but they should act as patiently and sympathetically as possible, and with as much understanding as possible, and they should take by the hand the people who need guidance, and not treat them curtly and discourage them.

A third point I wish to make is that, as I said in the beginning, we have had a Select Committee. I am very grateful to them for the work they have put into this Bill. They have given us a Bill and although I do not regard that Bill as the law of the Medes and the Persians which cannot be changed, I still think that our deviations from it should be as few as possible. The Bill produced by them has been thoroughly investigated. The points I have introduced here are points which did not pertinently come to their notice. In the one case, where we allow the option to continue until 30th June 1965. I said that if before that time a sound case is made out for prolonging the period of the option still further, I would consider it. I do not want to promise to do so, but if a good case is made out before that time I am prepared to consider very seriously and sympathetically extending that period beyond 30th June 1965. I do not think it will be necessary, because I think by that time people will have become so accustomed to the Act that it will not be necessary further to extend the option period.

Many suggestions have been made here to-day and I shall deal with the most important of them, those which affect the principle. Many suggestions have also been made which deviate from the principles already accepted by the Select Committee. I think, e.g., of the suggestion that whereas we now provide that the provisional taxpayer should render his returns three times a year, we should make it twice. I cannot give any consideration to that. The Select Committee decided on three, and at this stage I would rather not tamper with their decisions too much.

I want to come to a few of the more important points raised, and then I shall deal with a few of the minor problems. The first point I wish to deal with is the over-deduction from salaries. That is the point particularly dealt with by the hon. member for Pretoria (Central) (Mr. van den Heever). As the position is now, there is a measure of overpayment which is inevitable. The medical expenses are not taken into account, nor insurance premiums, nor the rebate for dependants. All three of these things are very difficult to determine beforehand. One will only know what the medical expenses are at the end of the year. Insurance premiums can be altered at any time of the year; the number of dependants may increase or decrease during the course of the year. Nor are they automatic, like the rebate for children. In every case certain things must be proved. Those are difficulties with which we are faced, and we have set out from the standpoint that there will inevitably be some measure of over-payment by salaried workers, but that it will be very small and insignificant. But we also felt that from the administrative point of view it would be preferable to make repayments at the end of the year, rather than to make further collections. Not only is that what we felt, but we also know from experience that the problems in regard to collections can be very serious. That is also the experience in other countries like Australia and the U.S.A., where similar forms of taxation apply to what we are now proposing. The object is as nearly as possible to deduct the exact amount every month. But in regard to the overwhelming majority of salaried people there are repayments. That is our experience. In other words, experience shows that even though they try to get as near as possible there is always some measure of over-payment in the case of salaried people. In the United States the percentage of salaried people who receive repayments at the end of the year is 70 per cent and in Australia it is 95 per cent. Now the reason for the over-deductions is very interesting. It is ascribed to various factors. Fear of the fine is not a cause which is mentioned, but one cause which is in fact mentioned is that some taxpayers regard it as a kind of compulsory saving and deliberately pay more than they should pay in terms of the tables. They prefer to have a higher assessment every month. Now it is very interesting that e.g. in Australia the Commonwealth Treasurer expressed the following opinion—

Still we find that under that system 95 per cent of the wage-earners must be given a repayment at the end of the year because to some extent they made an over-payment every month, whilst the fact that certain deductions still had to be made was not taken into account.

I do feel that I should devote attention to the desirability of making the margin as small as possible. If there is over-payment it must be as little as possible. I shall devote my attention to that. It is no easy matter. We cannot take into account rebates for dependants and insurance premiums and deductions for medical expenses. That we cannot do, but perhaps we can collect a smaller amount than the actual figure in order to satisfy the people that an over-payment is not demanded from them beforehand. I shall go into that. But as I said, the experience in other countries is that there are appreciable over-payments and that the people welcome it. Many of them do so deliberately because they regard it as a form of compulsory saving. At the end of the year, they receive something which they have saved without actually realizing that they were saving.

I want to come to another point, the question of repayments. Many hon. members discussed that. I have now spoken of wage-earners, employees. If there is an overpayment in their case it is repaid automatically. I think there is some measure of misunderstanding. In the case of wage-earners the repayment of any over-payment is automatic, only in the case of the provisional taxpayer it is not automatic, but it can be repaid on application. The reason why it cannot be automatic is because we have now accepted the single account system in our latest legislation. In other words, we consider that all the debt of an individual to the State by way of taxation, whether it is arrear debt or whether it is for the current year, and whether it is for the province or for the Central Government, all of that constitutes one single debt owing to one creditor. It is not that one now owes some money here and some money there and that there are various provisions in regard to fines if one does not pay in time. There is now a uniform system and there is only one account. That simplifies the accounts and facilitates the collection. Because we have that system now, a provisional taxpayer, if he owes arrear taxation and he has made an over-payment, will not be given back the over-payment, but it will be used to pay his debt, because it is now one current account which is kept for him. But on the other hand I want to say that whereas it is now practically certain that there will be a small measure of over-payment in the case of salaried people because certain rebates are not taken into account, over-payments by provisional taxpayers will seldom take place because these persons, in calculating their liability, will take into consideration all deductions and rebates. They will do so themselves, and therefore the possibility of a repayment to them at the year will really be so exceptional that I do not think it is necessary to do anything further in that regard in view of the fact that we have difficulty in regard to our electronic computer. It has been suggested that in the few cases where over-payments may take place, repayments should be made on demand. Now I will tell hon. members why I say “may be made on demand”. If someone to-day has a credit of R20 in that account (an over-payment was made when he last paid), and in a short while afterwards his next payment falls due, surely it is foolish to repay that R20 to him to-day if within a week or a fortnight he has to pay another R40.

Will he know about it?

He will know about it, because he can make application and the Commissioner must approve the repayment, and the Commissioner will tell him: This is the position; you have made an over-payment but it is a small amount and it was used in respect of the debt you incurred in the past, or it will be set off against the next payment within a week or a fortnight. But if he can make out a sound case, the Receiver will give it back to him. However, we cannot make it automatic. That position would simply be impossible as the result of the limitations of the computer, in view of the fact that we have now accepted the single account system. That is only in the case of the provisional taxpayer. The wage-earner’s is automatic.

Now I come to another opinion which has been expressed here by various hon. members. I think the hon. member for Pretoria (Central) (Mr. Van den Heever) mentioned it first. I refer to the proposal that where employees request their employers to deduct from their salaries bigger amounts than those prescribed in the relevant tables, the employer should be obliged to comply with the request, provided the Receiver of Revenue agrees to it. I think that is the proposal. Well, I think this is one of the matters that we considered very carefully and there are certain difficulties in that regard that I want to mention. The first is that if it is made compulsory we run the risk that the employers will be dissatisfied. We have repeatedly given the employers the assurance in the course of these preparations that they will not be obliged to comply with such requests from employees. We are committed to a certain extent therefore in this connection. But the position may still arise that the employee applies for it, that the employer has no objection and that the Commissioner agrees. What is to happen then? Then there is another difficulty and I am pleased that to some extent the hon. member for Standerton (Dr. Coertze) has given the reply on this point to the difficulty I have. This additional deduction over and above the prescribed deduction will also enjoy preference now over other amounts which have to be withheld from employees, which have to be deducted from their salaries. We are also changing the priority of debts in the case of insolvency. In the event of insolvency, as the hon. member has correctly said, if there has been an over-payment the Commissioner will only take what is due to him, and he will then be able to hand over to the trustee the amount overpaid to be used in terms of the Act. I think that is the reply so far as insolvency is concerned, but there are also other amounts such as amounts collected, for example, in terms of Court orders for the maintenance of a child and which also have to be deducted by the employer from the employee’s wage and if there is not sufficient for that purpose it may be that eventually the surplus will come back to the taxpayer, and it might just as well go back to the person who is entitled to it, and that is the wife who obtained the Order of Court. There are difficulties, however; but I shall go into this matter further. I do not want to act hastily. In any event I want to say that I do not propose to ask for the Committee Stage immediately. I want to put the amendments that I propose to move, on the Order Paper so that hon. members can also consider them. If hon. members also wish to bring about amendments I shall be very pleased if they will put them on the Order Paper. But the question of an increased deduction is one which I should like to go into a little further to see what can be done—not to make it compulsory—but to see what can be done where the employee asks for it, the employer has no objection and the Commissioner is satisfied with it. At the moment it is not possible to do so.

I think these are the three main points which have been made here. Then there is another point which has been made in respect of deserted wives and the position as far as they are concerned. The normal case of a husband whose wife works, presents no difficulty. The rebate is given to the husband and that is why the wife pays comparatively more than the husband, but the position is rectified because if there is any amount to be paid in the husband is asked to pay it, not the wife. The joint sum that they pay in must be the same as the amount which they would have paid if they had received one assessment as a family unit. Under the present system the position is the same because if the husband applies for a separate assessment, his wife will be in the same position as is the case here, if the husband pays separately, the various rebates and deductions are taken into account, but in the other case where the wife has been deserted by her husband and she does not know what his address is, or where he is unable to pay anything and she has to take care of her children alone, we have said that all that the deserted wife has to do in such cases is simply to approach the Commissioner and obtain a directive from him to her employer to make deductions which will be more in line with her eventual tax obligation.

A few other minor issues have been raised. The hon. member for Parktown (Mr. Emdin) has referred to the question of reimbursive allowances and the fact that sometimes the employee does not wish to give his employer the facts; he prefers to go direct to the Receiver. It is only in the case of reimbursive allowances that the employer has to obtain a directive from the Receiver. In other cases, for example where the employee incurs expense in obtaining his renumeration, the employee has to obtain the directive from the Receiver. The hon. member for South Coast (Mr. D. E. Mitchell) has raised the question as to whether there can be any delegation of power. In this regard I have this note here—

In other words, there is no necessity for a specific delegation in any particular case.

There are many other points which have been mentioned here. I have dealt here with some of the points which should really be dealt with in the Committee Stage and I have indicated where it is my intention to go into those points further. In other cases I have explained what the position is. Then there are the other cases which I have also mentioned here and which to my mind represent too much of a deviation from the recommendations of the Select Committee and which I would rather not take into account. I do not think that that is something that we should start with at this stage. I want to make an appeal again, not to hon. members but to the public that we should give this scheme a chance, in the first year particularly. If there are any shortcomings one way or another, let us be patient and tolerant, and let us try to see this year where there are hitches and defects and then we can come back to this House again. If hon. members discover defects they can write to the Department from time to time and we can then bring about the necessary amendments later on.

This is a very important Bill. I do not know whether hon. members are fully aware of it, but it has been referred to here as a great reform, which I think will have far-reaching consequences, not because the State will profit by it, as the hon. member for East London (North) has said. In actual fact the State is the taxpayer of South Africa, because if it collects a great deal of money here it will be to the benefit of the taxpayers and then there will be so much less money to obtain from the taxpayer by way of other taxes. In other words, any benefit that accrues to the State, benefits the taxpayers of South Africa as a whole and if any person evades taxation then it is not the Government in the first place that he is cheating but he is cheating all the other honest taxpayers, because the result of his evasion is that more money has to be collected from the other honest taxpayers. This is an important innovation. I know it goes without saying that every new system is always viewed with a certain amount of suspicion. I recall that when we introduced the decimal system there were many people too who had misgivings. But unless we come forward with new schemes we shall make no headway and, after all, we must go ahead. I think this is something which can contribute a great deal towards the progress of this country generally, and I therefore move.