National Assembly - 21 May 2003
WEDNESDAY, 21 MAY 2003 __
PROCEEDINGS OF THE NATIONAL ASSEMBLY
____
The House met at 15:03.
The Speaker took the Chair and requested members to observe a moment of silence for prayers or meditation.
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS - see col 000.
QUESTIONS AND REPLIES - see that book.
UNPARLIAMENTARY LANGUAGE
(Ruling)
The CHAIRPERSON OF COMMITTEES: Order! Before we continue with the next Order of the Day, I wish to make the following ruling. On 8 April during the debate on the Sport and Recreation Budget Vote, the hon Mr W J Seremane raised a point of order about a remark the hon I Z Ncinane made with reference to the hon T D Lee. I undertook to study the Hansard and give a ruling. Having now had the opportunity to study the unrevised Hansard, I wish to rule as follows.
Hon Mr Ncinane, with reference to the hon Mr Lee who had just left the podium, said - and this is translated from the original Xhosa text - that “He perseveres in being a zombie”. The remark cast aspersions on the integrity of the hon Mr Lee, and I therefore ask the hon Mr Ncinane to withdraw the remark.
Mnu I Z NCINANE: Sihlalo nani malungu, nangona ndayithetha into yokuba le ndoda ifana nesithunzela … [Kwahlekwa.] … kwaye nangona ndandiba yinene emsulwa leyo, kodwa ngenxa yokuba wena Sihlalo weeKomiti usithi akulungile ukuthetha eso sipororo gqi apha kule Ndlu yoWiso-mthetho, ndiyawarhoxisa loo mazwi. Enkosi. [Chairman and hon members, although I did say that this man is like a zombie … [Laughter.] … and although I believed that to be the truth, because you, Chairperson of Committees, say that such language is unparliamentary, I withdraw those words. Thank you.]
The CHAIRPERSON OF COMMITTEES: Eli lungu liwarhoxisile loo mazwi. That is, the member has withdrawn the remark.
NOTICE OF MOTION
Ms R TALJAARD: Chairperson, I hereby give notice that the House -
(1) notes that -
(a) Dr Richard Young's litigation has revealed that the Report
of the Joint Investigation Team (JIT) on the arms deal was
extensively edited in the consultation process between the
Auditor-General and the Executive;
(b) the editing has compromised the Auditor-General;
(c) senior defence officials and former Chief of Acquisitions,
`Chippy' Shaik, misled the Standing Committee on Public
Accounts (Scopa) in a public hearing in October 2000 on
conflicts of interest in respect of the arms deal;
(d) the sections of the draft report that dealt with these
inaccuracies in the presentation to Scopa were subsequently
omitted from the final report;
(e) the Auditor-General has stated on numerous occasions
before the House that the JIT Report was merely altered in
style and textual changes and that the interactions with the
Executive had not resulted in substantive alteration;
(f) it has been misled to believe that no substantive changes
were made to the JIT Report; and
(2) calls on -
(a) the Office of the Auditor-General to release the
comprehensive drafts of the JIT Report immediately and to
reveal the extent to which the House has been misled; and
(b) the Speaker to grant an immediate debate on this issue and
take the strongest possible action against any official or
public office bearer who has misled the House.
Hon MEMBER: Hear, hear! [Applause.]
EXCHANGE CONTROL AMNESTY AND AMENDMENT OF TAXATION LAWS BILL
(
First Reading debate)
Mrs R R JOEMAT: Chairperson, before starting my address on this Bill, the Minister has requested that I bring to the attention of the House some unintended textual errors for correction. In line 33 on page 9, in clause 10 the word “or” at the end of the sentence should read “and”. In line 34, which is the next line, the phrase “has failed to confirm” should read “has confirmed”. These changes should therefore be effected to the Bill as introduced.
The ANC supports the Exchange Control Amnesty and Amendment of Taxation Laws Bill before us. This Bill speaks about and appeals to honesty, forgiveness, fairness and patriotism so that we can build a country for all who live in it.
I quote from the President’s speech on the report of the Truth and Reconciliation Commission:
“Together we must confront the challenges of steering through a complex transition that demands that we manage the historical fault-lines, without papering over the cracks, moved by a new and common patriotism. Patriotism, through nation-building, asks of us, the people, to give, invest and sacrifice. Some have in the past, but we currently still have the mindset of people who do not put in but rather ask what they can get out of the country.
This Bill grants amnesty to certain individuals. If amnesty is granted, then a sinful act or crime must have been committed. Amnesty means that a general pardon is granted owing to a crime or crimes committed against the Government. The crime that is addressed in this Bill refers to those individuals who moved their assets offshore illegally, either by themselves or owing to advice and assistance from advisers or facilitators, tax advisers, financial advisers or attorneys.
The confession room is open. A period of grace to confess your sins has been granted as from 1 June to 30 November 2003. Now, unlike in religion, this will not be a case of whoever confesses their sins will be forgiven. Only South African residents, natural persons, including those who are deceased and who have passed their inheritance on to another person or individual or individuals, will have their sins forgiven. A closed corporation or trust may also apply for amnesty.
An amnesty unit will be set up to oversee this process. Members of this unit are subject to the same secrecy provisions as members of Sars dealing with income tax returns. The application process is designed to provide maximum privacy for an applicant so as to ensure that secrecy is maintained throughout the approval process.
Those who qualify for amnesty will not be obliged to disclose the names of the advisers or facilitators who assisted them. But if they mistakenly name them, then the Receiver of Revenue or the SA Reserve Bank cannot use this information to prosecute the advisers or facilitators.
The applicant will have to disclose the origins of the funds that are being disclosed. Facilitators will, however, be allowed to apply for amnesty for the role they played in shifting the funds. No amnesty will be considered for individuals or entities that are engaged in criminal activities such as drug peddling, smuggling, money-laundering and/or terrorist activities. Those who are already under investigation by the authorities regarding their foreign assets will not qualify for amnesty through this amnesty process.
In a news article it was stated that some advisers are advising their clients not to apply for amnesty as it may set off an investigation into their matters. These advisers must remember that under the Financial Intelligence Centre Act, it is required that they disclose this information.
Disclosure of these funds will be charged with a levy of 5% on assets set for repatriation and 10% against assets that will continue to be held offshore, less the unused R750 000 allowance. These levies must be paid from the foreign assets’ proceeds within three months. A levy of 2% will be charged if there was a failure to disclose any income from foreign assets that were converted into domestic income. This is extremely lenient.
The exchange control aspects of the amnesty apply to the extent that foreign assets are disclosed - on an asset-by-asset basis. Each asset must be applied for. Those assets that are not disclosed will still be subject to potential civil and criminal exchange control prosecution.
An applicant’s disclosure of foreign assets requires a statement of that asset’s market value as at 28 February 2003, with the market value determined in the foreign currency of the country in which that asset is situated, as well as a description of the nature of that asset. Applicants and facilitators seeking amnesty must submit an application by way of a sworn affidavit or solemn declaration.
We ask ourselves how it was possible for funds to leave this country. Money was transported through our smaller airports where security is not so sophisticated; money transfers were made; bogus companies were set up offshore and transactions by underinvoicing or overinvoicing for purchases were done. These are but a few of the creative schemes that were used.
The DP abstained from voting on this Bill in the committee because of trivial reasons such as: the Bill is imperfectly crafted; it will not achieve Government’s stated objectives, that is, to secure more revenue; and that the amnesty is not wide enough. As usual, doom and gloom. We want to say to the DA: Crime is crime. No exception must be given to white- collar crime, which is sometimes seen as not being so severe.
Be a true South African or a true African. Bring your money back and be part of building a better life for all. Thank you, Chairperson. [Applause.]
Ms R TALJAARD: Deputy Chair, colleagues, as a legislator one is not very often confronted with the dilemma that confronted us in considering this Bill before the House today. The DA supports the Minister of Finance’s announcement in the Budget Speech of this amnesty. We support it in principle, knowing full well that amnesties are always and in all circumstances a gracious pardoning, never ever a condonation, of ill deeds. We also support the three policy objectives that the Bill espouses: to enable violators to regularise their affairs; to ensure maximum disclosure of foreign assets and to facilitate repatriation thereof; and to broaden the tax base.
We furthermore support the related policy spin-offs of this process, easing the road to further exchange control liberalisation and the harmonisation of our efforts with international efforts to target tax havens and money- laundering. For all these initiatives, Minister, you do have our support. However, we believe that the system that has been designed to give effect to the amnesty process itself is problematic. We do not believe that the policy objectives …
The CHAIRPERSON OF COMMITTEES: Order! Order! Please continue.
Ms R TALJAARD: … stated in the explanatory memorandum will be realised by the imperfect instrument we vote on today. This is regrettable, as we would have wanted to see a tremendously successful tax and exchange control amnesty process. For any successful amnesty two ingredients are crucial: equity and certainty. Certainty and equity, which a general amnesty would have facilitated, are crucial to confidence in the process. And confidence in the process, in turn, is crucial to a success.
In terms of equity considerations, a constitutional question arises. The Bill discriminates among those taxpayers who will be eligible for the amnesty. Individuals, close corporations and trusts can apply, companies can’t. Facilitators will be eligible, but advisers won’t. And so with the discrimination among categories of eligible applicants the concerns arise. As Sars pointed out, the question of discrimination is one of rationality with reference to stated policy objectives. Without having had sight of any of the formal legal opinions sourced within either Treasury or the Reserve Bank, the DA has its doubts as to whether the chosen categories would meet the rationality test and pass constitutional muster.
We do not believe that, apart from constitutional concerns, some of the distinctions will be workable. For example, many advisers and facilitators would have multitasked and worn both hats. It may even be difficult to separate these roles. How does the Bill aim to solve this quandary? The new section 3(1)(c) refers to facilitators as those who “… assisted that applicant (otherwise than solely in an advisory capacity)”. Not only is this clumsy legal language, but it would furthermore be very difficult to make a distinction based on this wording and claim that parties have been treated fairly and equitably.
In addition, the exclusion of companies from the ambit of the amnesty will reduce its scope considerably and minimise the numbers of those that will be able to regularise their affairs and be brought into the tax base. This policy decision has clearly been made due to the need to facilitate the continuation of the exchange control regime in a process of gradual liberalisation. As the Reserve Bank indeed told the committee, any extension of the tax and foreign exchange control amnesty regime to companies would render foreign exchange controls ineffective.
It is exactly, however, because this amnesty process should play a large part in giving us a full and clear picture of the South African assets offshore en route to full currency convertibility that the company exclusion is regrettable. By excluding companies one can predict, with relative certainty, that the picture of what is out there offshore will almost certainly be incomplete. Despite reassurances, we believe that the constitutional validity of the exclusion of companies from the ambit of the amnesty remains challengeable, and time will tell whether any corporate entity will take up the cudgels of such a challenge as the amnesty process unfolds. [Interjections.] That will be the test. Indeed, Minister, that will be the test.
For the amnesty to work, the certainty ingredient must mean that those who come clean are confronted with a tax TLC, unfair as this may seem to law- abiding taxpayers, and not with a retributive tax TRC. There is an important difference.
In this regard, certainty about the powers and functions and procedures to be applied by the special amnesty unit will be crucial. While much has been done to take away fears on the degree of discretion to be applied by the unit in the decision-making process and specific secrecy provisions that will apply, we do not believe it to be desirable to leave the bulk of the legislation that deals with the unit to be dealt with through delegated legislation. It merely serves to increase the uncertainty at a time when one wishes to maximise certainty.
This is obviously most important in respect to information, which has been addressed fairly comprehensively in the Bill, we concede, but also has a strong, just administrative action component that becomes far more difficult when officials act under delegated legislation.
In other jurisdictions that have applied an amnesty the records of unsuccessful applicants were subsequently destroyed. On Monday the committee was told that the National Treasury would retain all documents purely to facilitate appeal procedures, both internally and to the High Court. While there are new prohibitions on the destruction of records under the Promotion of Access to Information Act, the DA believes that an amendment could have been included in this section, stating that the National Treasury, apart from being bound by secrecy provisions, may only retain documents to facilitate appeals. This would have obviously added a modicum of legal certainty as to the purpose for which the records are being retained.
While we agree categorically with the principles and policy objectives which the amnesty announcement in the Budget aimed to achieve, we do not believe that this Bill before the House will achieve its goals. We believe that it is an imperfect instrument. We will not oppose it, Minister, as we agree with its goals and underpinning reasoning, but we cannot, given its imperfections, support it much as we would have wished to. The DA abstains from this Bill. [Applause.]
Dr G G WOODS: Chairperson, the IFP supports this amnesty and the Bill that introduces it. After all, it was the IFP in 1998 which, through my colleague Hennie Bekker, proposed just such an amnesty. I think the Minister has been wise in waiting for a few years. The environment is obviously more probable now for such an amnesty, I think, in terms of the points he has raised before - that the investment climate and the returns in this country would make it more conducive to bring money back into the country, as the new exchange control regime is far more friendly and facilitative for such an amnesty.
Amnesties, especially those that relate to tax matters, are always extremely difficult. It is about having to make law; to make the particular legal actions of a particular category of people free of consequences. This invariably brings numerous complex competing considerations into play. There are trade-offs, balances and judgment calls which have to be established and then built into the law, which must be clear on the processes and other practicalities necessary to facilitate the amnesty.
It is all an exercise of working to a bigger goal and to a bigger picture, and will always be an exercise that might not get it all right. After all, its success will be based on how many people at the end of the day actually apply for the amnesty in the window period. We can never be sure that the conditions of the amnesty will achieve what is necessary to coax the target group to come forward, or that the conditions, on the other hand, might discourage them. We know of the recent Italian experience where they did not get it right and the amnesty was considered to be something of a failure.
Our appreciation of this Bill is that its drafters really applied their minds, and I think they also applied their imagination. It is imagination that is required here, because one is working with the unknown. One is not quite sure of the psychology of the would-be applicants as to what would coax them to come forward, and, on the other hand, what would deter them.
Have we got it right? We don’t know. Of course there will be those that will be wise before the event and some that will be wise after the event. But only once the window period ends will we know whether we did get it right.
I think what could deter applicants is if they feel the penalties are too high, or if they feel that the confidentiality of their applications is not sufficiently tight. However, against this I think we do have to look at the positives, the desirables, the overall goals. The one goal is the benefit of the tax base broadening, the equity it brings into the system, the foreign inflows, the modest additional revenues and the fact that it also, in its own way, discourages money-laundering.
The IFP would encourage everyone who this amnesty speaks to, to apply, because it is the right thing to do, and I think we would go along with the hon Joemat here and also say because it is the patriotic thing to do. A little warning is that we all know how Sars is becoming increasingly proficient at finding people with bad tax records, and we know they are gradually working their way into foreign transactions.
Also, with the strength of the double taxation agreements that have come forward and the communication channels that are opening up between governments - even those in the so-called tax havens - those people that don’t come forward who should come forward might only get away with it for a year. This might take five years, it might take 10 years, but somewhere down the road, when it does catch them, it will be devastating.
This Bill is not only about the tax amnesty. There are other tax amendments to the tax laws, most of which the Minister announced in his Budget Speech earlier this year. One of the surprise inclusions was the reduction of tax on retirement funds from 25% to 18%. As the majority of pension fund members, believe it or not, are from the low income group, I think that it was inappropriate before that they had to pay such a high rate on their savings, as opposed to the 18% they were paying in normal income tax. This will provide some sort of interim relief ahead of the comprehensive review, which we know has already begun and we believe will be concluded next year.
Another issue in the Bill is the increase in the turnover threshold for the lower rate of tax allowed for small businesses. This, of course, makes good sense and will help to stimulate expansion of the small business sector. We hope that the Minister will soon add to this, perhaps in consultation with the Minister of Trade and Industry, by proposing amendments to ease the complexity and, therefore, the cost of tax compliance for small businesses.
Other Budget Speech proposals, which we see are not in this Bill but which we hope to expect in a further tax amendment Bill towards the end of the year, would include the Minister’s promise of further extensions to the list of public benefit organisations qualifying for tax-deductible donations, and also the accelerated depreciation allowances for investment in underdeveloped designated urban areas. We see a number of interesting comment and opinions expressed on these issues, many of which I am sure the Minister will take note of and, where worthy, will include in the legislation that he produces.
To conclude, an issue that we also asked the Minister to visit at some stage is the introduction of a group basis of taxation for companies …
The CHAIRPERSON OF COMMITTEES: Order! Order! Continue, hon member.
Dr G G WOODS: Thank you, Chairperson. I think multinationals, in particular, would wish for such a basis, and we do note that this does exist with favourable circumstances and consequences in most other countries, particularly our trading partners. Thank you.
Dr W A ODENDAAL: Agb Voorsitter, laat my toe om by hierdie geleentheid die agb Minister en sy departement geluk te wens met die wyse waarop hulle Suid- Afrika se finansies bestuur. Suid-Afrika is dié ontwikkelende land in die wêreld met die beste prestasiesyfer. Ons hou vol met ‘n 3%, of amper 3%, groeikoers nou al vir ‘n geruime tyd, en daar is geen ander ontwikkelende land wat met ons kan kers vashou nie. Inteendeel, baie van die ontwikkelende lande in die wêreld is veel swakker daaraan toe, en die agb Trevor Manuel moet persoonlik daarvoor krediet kry en ons wens hom baie sterkte toe.
Natuurlik is daar ruimte vir verbetering en ek hoop ons sal in die toekoms ook hier aangename debatte kan hê oor sake waaroor ons dink daar kan verbetering wees, én in belang van Suid-Afrika sal ons dit graag wil doen. Nie so negatief as wat die “His Master’s Voice” of “big business” hier tussen die pienk progs aan my linkerkant dit wil doen deur nou buite stemming te bly nie. Dit is tipies van hulle om hul speelgoed uit die kot te gooi as hulle nie hul sin kry nie. Hulle praat namens “big business” en groot maatskappye. Meneer, dis ‘n patriot wat nie omgee vir die armes in dié land nie - nie ‘n flenter vir hulle omgee nie. Dis die rede waarom hulle so te kere gaan vandag. En daar het ons weer ‘n tipiese voorbeeld vandag.
Hierdie wetgewing om amnestie vir geld wat onwettig uit die land uitgeneem is - let wel onwettig, want dit is wettig om R750 000 uit te neem - dink ek is ‘n goeie wet. Dit sal beleggersvertroue verbeter, ek glo so. Dit sal groter sekerheid en groter voorspelbaarheid bring, veral by beleggers. Ek is persoonlik spyt, geagte Minister, dat slegs natuurlike persone, individue, geslote korporasies, trusts, en ook testamente - afgestorwe testamente - sal kwalifiseer. Vir my is dit nie heeltemal aanvaarbaar dat maatskappye uitgesluit word nie, bloot “because they operate under a wholly separate, discretionary regime”.
Ek sal graag van die Minister in ‘n verdere verduideliking wil verneem waarom maatskappye uitgesluit word van hierdie amnestie. Dit sal baie meer geld in die land kon inbring, dink ek, as ons dit ook kon uitbrei na hierdie instansies toe, en ek sal graag van die Minister wil verneem of dit nie vir ons in die toekoms moontlik sal wees om ook hierdie toegewings aan sy gaste te kan maak nie. Ons het ook daardie ekstra geld nodig vir beleggers in Suid-Afrika om beleggings te maak, sodat werkgeleenthede geskep kan word, én ons met sukses die armoedevraagstuk in Suid-Afrika kan aanspreek. Die Nuwe NP sal dié wetgewing ondersteun. [Applous.] (Translation of Afrikaans speech follows.)
[Dr W A ODENDAAL: Hon Chairperson, allow me on this occasion to congratulate the hon Minister and his department on the manner in which they manage South Africa’s finances. South Africa is the developing country in the world with the best performance figures. We have maintained a growth rate of 3%, or nearly 3% for a considerable time now and no other developing country can hold a candle to us. On the contrary, many of the developing countries in the world are far worse off, and the hon Trevor Manuel must receive personal credit for that and we wish him everything of the best.
Of course, there is room for improvement and I hope that in future we will also be able to have pleasant debates here on matters with regard to which we think there can be improvement, and in the interests of South Africa we will do that gladly. Not as negatively as “His Master’s Voice” or “big business” here amongst the pink progs on my left want to do by now abstaining from voting. It is typical of them to throw their toys out of the cot if they do not get their way. They speak on behalf of big business and big companies. Sir, this is a patriot who does not care for the poor in this country - does not care two hoots for them. That is the reason they are carrying on so today. And there we once again have a typical example today.
This legislation regarding amnesty for money taken out of the country illegally - please note illegally, because it is legal to take R750 000 out
- is, I think, a good piece of legislation. I believe it will improve investor confidence. It will bring about greater certainty and greater predictability, particularly for investors. Personally, I am sorry, hon Minister, that only natural persons, individuals, close corporations, trusts and also estates - deceased estates - will qualify. It is not entirely acceptable to me that companies are excluded, merely “because they operate under a wholly separate, discretionary regime”.
I would like to hear from the Minister a further explanation as to why companies are being excluded from this amnesty. I think it could bring much more money into the country if we could also extend it to these institutions, and I would like to know from the Minister whether it will not be possible in future for us also to make these concessions to his guests. We also need that extra money for investors in South Africa to make investments, so that job opportunities can be created, and we can successfully address the poverty issue in South Africa. The New NP will support this legislation. [Applause.]]
The DEPUTY CHAIRPERSON OF COMMITTEES: Order! I now call the hon M A Tarr. This is the hon member’s maiden speech in this Chamber. [Applause.]
Mr M A TARR: Chair, this is not my maiden speech in this Chamber as I have spoken here before, but it is certainly my maiden speech for the ANC and I can happily tell members with whom I used to be that I have at last arrived where I should have been long ago. [Applause.]
I find the attitude of the DA towards this Bill absolutely surprising. The Bill is important for this country, because there will be an inflow of money coming into the country, and that will lead to investment, growth and jobs. It is also important to persons who are outside the country so that they can regularise their affairs and put themselves on the right side of the law. The hon Taljaard actually raised her issues in the portfolio committee meetings, or in many of them she did, but unfortunately I never, at any stage, saw any proposed amendments that would put the imperfections, or the so-called imperfections, right. [Interjections.] She could have amended them in the committee.
There are members there who get adequate opportunities to speak, and I wish their Whips would give them a chance sometime. The DA has repeatedly heard the Minister, they have repeatedly heard Sars assure people that there is no hidden agenda whatsoever behind this Bill. At no stage is the Bill going to be used as a witch-hunt against people who have been applying for indemnity. The Bill is being crafted and written in such a way that anyone who reads it can quite clearly see this. But no, that is not good enough for them.
The DA sees fit to cast doubts in the minds of potential amnesty seekers. [Interjections.]
Mr K M ANDREW: Absolutely not. Mr M A TARR: Well, then I didn’t understand what Ms Taljaard said. [Interjections.] There’s doubt in the minds of potential amnesty seekers, so the speech or their attitude could possibly contribute towards people who would ask for amnesty perhaps standing back and saying: “Hey, there’s some hidden agenda here, perhaps I’d better not apply for amnesty”.
Surely a responsible opposition would be encouraging people to apply for amnesty? Surely they would want to see this money flowing back into the country? Surely they would want to see investment? But, no, they seem to have some other agenda. I know what their agenda is. The fact that the ANC is doing an excellent job of running this country is something their minds just cannot get to grips with. [Interjections.]
The Oxford Dictionary defines amnesty as “an intentional overlooking, an act of oblivion, a general overlooking or pardon of past offences by the ruling party”. Obviously, as other speakers have said, there must have been an offence; one with which I think the Government has been extraordinarily generous in the extent to which they are prepared to overlook it.
Money has been moved out of the country, illegally, for decades by a variety of means, with which we are all familiar: overinvoicing; underinvoicing; purchasing foreign banknotes and even carrying them out in suitcases; purchasing assets such as antiques, yachts, carpets and sending them out; unspent portions of travel allowances staying overseas; etc.
The details of this Bill are well known, so I don’t want to dwell on them. However, it is actually very interesting to have a look at a bit of the background behind the Bill. Why do people want to move their money out? Why were individuals so keen to get their money out of South Africa? Because basically they had no faith in the future. They were actually getting themselves out of the country as well, and most of them were supporters of the party on my left.
In fact, I’m sure that that party gets more votes in Australia than they get here. There was an amazing mindset at the time, and it went something like this: Apartheid is not going to work. This country is going to end up in chaos after apartheid. When the new Government comes in they will not be able to run the show, so for God’s sake get your money out and yourself as well, if you possibly can. [Interjections.] That was the attitude that prevailed at the time.
But what has now happened? What has changed? What has actually changed? What has changed is a change in mindset. The long and the short of it is, of course, as the Minister pointed out in his introductory speech, that there are billions of rand illegally overseas that people would like to repatriate, and the only way to do this is via amnesty. The obvious question is then: Why do the same people, who were so desperate to get their money out 10 or 15 years ago, now want to get it back? It is worth dwelling on this for a moment, because obviously people in those ranks over there spend so much time nit-picking that they actually don’t see the big picture.
Let’s look at the big picture. Let’s look at it. We have been through a peaceful transition, something nobody else … [Interjections.] Mr Chair, can I have protection from this hon member here? I am sure he will get an opportunity to make his speech some time? [Interjections.]
The DEPUTY CHAIRPERSON OF COMMITTEES: Could we have order here. Hon members, there is a limit to the amount of interjections you can make.
Mr M A TARR: This country has been through a peaceful transition, something nobody else could have done, that nobody in those ranks there could have ever done.
Inflation is under control. The economy has weathered storms and it has weathered enormous structural change. Tax rates have declined, foreign debt has declined, and foreign exchange regulations have been relaxed. Services such as housing, water, schooling, electricity, etc, have been extended to the poorest of the poor, and continue to be. Previously disadvantaged people are entering fields where they had no success. So in terms of the reality, I think I make my point. Things have fundamentally changed from the time when the people who are sitting out there took their money out of the country, and they now want to bring it back.
I think sometimes to the disappointment of the DA, South Africa has done incredibly well under the ANC Government. We are now in a situation in which the people who took money illegally out of the country want to bring it back. Things have worked out differently to what people thought they would, and the ANC can indeed deliver.
You know, many years ago I sat in this Parliament as a predecessor of that party - it was then the PFP. We were a small party in those days overwhelmed by a lot of National Party members. I used to have a dream that one day the National Party would be sitting in the opposition benches. The gods have been kind because, in fact, they are. The name might be different, but there they sit, and the most amazing thing is that, in fact, many of the faces are still exactly the same. [Laughter.] [Interjections.]
Many of the policies are exactly the same as well. I look at the by- election in Oudtshoorn - “swart gevaar”. [Interjections.] “Swart gevaar” is alive and well in those benches, and, as I said, the gods have indeed been kind to me in that I can now see the old National Party sitting in the opposition benches, where they should be. [Interjections.] But it’s true, you use it in every by-election. [Interjections.] I will use it, as long as you use it in by-elections. [Interjections.]
The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Order!
Mr M A TARR: With this Bill, the Government has taken great pains to ensure that there will be no repercussions on persons who apply for amnesty. Individuals will be able to repatriate their funds without fear of prosecution in terms of exchange controls or tax regulations. It gives me pleasure to support this Bill on behalf of the ANC, and I certainly hope that all persons will take advantage of this legislation and help make a contribution to our nation. Thank you, Mr Chair. [Applause.]
Mnr A BLAAS: Voorsitter, die ACDP sal ook hierdie wetsontwerp steun. Ek dink dis ‘n bekende feit dat die agb Kent Durr oor ‘n redelike klompie jare al baie aanvoorwerk gedoen het en ‘n groot kampvegter was vir die instelling van ‘n vorm van amnestie vir die oortredings van wederregtelike verwydering van geld uit Suid-Afrika.
Alhoewel ons ‘n bekommernis het oor die wetgewing, in terme van die bereiking van sy doelwitte, is dit tog ons oortuiging dat daar baie mense is wat hul geld wil terugbring Suid-Afrika toe, en dat deur hierdie amnestie hulle die geleentheid gaan kry om dit te kan doen sonder om nadelige gevolge te hê en onder baie spesifieke voorwaardes. Daar is egter die mening dat daar baie mense is wat dit nie gaan doen nie en gevolglik is die bekommernis oor die sukses van hierdie wetgewing, soos deur vorige sprekers uitgewys, ook ons bekommernis. Maar, wat ookal die resultaat is, dit gaan beter wees as wat ons het op die oomblik en gevolglik sal ‘n mens hierdie spesifieke wetgewing noodwendig moet steun.
Ons wil tog ‘n beroep op die agb Minister doen om vir ons, as dit moontlik is, ná die einde van die vensterperiode terugvoer te gee oor die resultate van hierdie oefening. Dankie. (Translation of Afrikaans speech follows.)
[Mr A BLAAS: Chairperson, the ACDP will also support this Bill. I think it is a well-known fact that the hon Kent Durr has been doing the ground work for a number of years and that he was a huge champion for the institution of a form of amnesty for the transgressions of unlawful removal of money from South Africa.
Even though we have a concern regarding this legislation, in terms of the achievement of its goals, we are convinced that there are many people who will return their money to South Africa, and that through this amnesty they will be given the opportunity to do so without incurring damages, and subject to very specific conditions. However, there is an opinion that there are many people who will not do this and consequently the concern for the success of this legislation, as mentioned by previous speakers, is also our concern. But, irrespective of the results, this will be better than what we have at the moment and therefore one will have to support this specific legislation.
We do appeal to the hon Minister to give feedback to us at the end of the window period, if it is possible, as regards the results of this exercise. Thank you.]
Miss S RAJBALLY: Thank you, Chairperson. The shifting of assets offshore in contravention of the exchange control regulations has sadly been practised for a number of years. The same is noted with the violation of income tax laws by the illegal holding of foreign assets since 1997.
Though the MF is disturbed by these practices and would have wanted the long arm of the law to be the tool to correct this, it supports the Government’s aim to encourage individuals to regularise their tax affairs and repatriate some or all of their foreign assets.
It is indeed a difficult task to accomplish, but regulatory reforms, enhanced law enforcement and the international exchange of information overriding bank confidentiality standards and a frontal attack on tax haven countries apply pressure through economic and legislative factors.
Though to many the bending of rules in relation to banking secrecy may seem like contravention, in view of this rife violation the MF feels that accommodation should be made, with strict procedures, to attain such information.
The MF further supports the establishment of a separate body to deal with amnesty applications made by exchange control and income tax violators, overseen by the Minister and the chairperson.
The MF supports the Exchange Control Amnesty and Amendment of Taxation Laws Bill. Thank you, Chairperson.
Mnr C AUCAMP: Agb Voorsitter en agb Minister, daar is twee oorwegings as ons na hierdie wetgewing kyk - die finansiële en die morele. Van die finansiële kant kan ek finansiële kennis aanhaal wat sê dit is die regte tyd vir so ‘n tipe ding, dat vanweë strenger wetgewing wêreldwyd dit moeiliker word om geld in die buiteland weg te steek en dat die gety draai dat mense hulle geld hiernatoe bring. Dis ‘n goeie tyd en ons gaan daardeur ook heelwat geld inwin en ook die belastingbasis verbreed. Dis positief.
Ook wat die morele betref, ek dink dis ‘n Bybelse beginsel. U kan maar lees daar in Levitikus van so eenmaal in sewe jaar - die jubeljaar - wanneer skuld afgeskryf word en selfs van eenmaal in vyftig jaar wanneer kriminele klagte ook afgeskryf word. Ons wil hierdie wetgewing dus graag steun. Dis goed om skoon te kom. In hierdie stadium wil ons almal vra om daarvan gebruik te maak. Maar, ek wil graag op ‘n ander saak wys. In hierdie Huis word daar gereeld beskuldigings gemaak van ‘n bepaalde party wat partypolitiek maak van alles. Ek wil vra dat u ná hierdie debat die Hansard gaan lees en dan kyk ons wie het vandag partypolitiek gemaak. In alle eerlikheid, die agb Taljaard het argumente suiwer op die punt af genoem. Sy het nie eenkeer die man gespeel nie; sy het suiwer wetenskaplike argumente genoem. En die DP doen die verantwoordelike ding om nie die speelgoed uit die kot uit te gooi nie; om nie die wetsontwerp te opponeer en te sê ons staan eenkant. En wie skree?
Ek dink dis tyd dat van die ander partye ‘n slag in die spieël kyk wie maak politieke punte van elke saak in hierdie Huis. Ek dank u. (Translation of Afrikaans paragraphs follows.)
[Mr C AUCAMP: Hon Chairperson and hon Minister, there are two things to consider when looking at this Act - the financial and the moral. From the financial side I can quote financial expertise that states that it is the right time for this type of thing, that because of stricter legislation worldwide it has become more difficult to hide money in foreign countries and that the tide is turning as far as people bringing their money to this country is concerned. It is a good time and we will also gain a lot of money and broaden the tax base. That is positive.
Regarding the moral side, too, I think it is a Biblical principle. You can read in Leviticus about how, once every seven years - the year of jubilee - debts were written off, and even about how, once every 50 years, criminal charges were also written off. We therefore really want to support this legislation. It is good to come clean. At this stage we want to ask everybody to make use of this.
But I also want to refer to another issue. A certain party is regularly accused in this House of turning everything into party politics. And I want to ask that you go and read the Hansard afterwards and see who has played party politics today. In all honesty, the arguments put forward by the hon Taljaard were purely to the point. Not once did she play the man; she advanced purely scientific arguments. And the DP is doing the responsible thing in not throwing its toys out of the cot; in not opposing the Bill and saying that we stand on the sideline. And who is doing the yelling?
I think it is time some of the other parties took a look in the mirror for a change and figured out who is trying to make political capital out of every issue in this House. I thank you.]
Dr P J RABIE: Mr Chairman, hon Minister, hon members, I’ll confine myself to the context of this Bill. The Exchange Control Amnesty and Amendment of Taxation Laws Bill was announced by the hon Minister in his Budget Speech on 26 February. This Bill will enable South African residents to disclose their foreign unaccounted assets that have accumulated without having to face any criminal or civil liability.
The DA is not opposed to this Bill in principle and this Bill must be evaluated in a historic context before the R750 000 offshore allowance was allowed. The main objective of this Bill is to allow offshore funds to be repatriated back into the South African economy, provided that individuals or legal entities comply with the set window period and that the individual or interested parties have not been under investigation for illegal or unlawful practices prior to application for amnesty.
South Africa is part of the global economy, which at present is experiencing a downturn. In terms of real growth in assets many residents with unaccounted offshore assets have generally, in real terms, suffered losses. The rather bleak state of affairs can be compared with the South African situation of positive economic growth with a broad spectrum of investment opportunities.
This Bill is technical, and a wide range of interested parties submitted a number of submissions regarding the precise wording of this Bill. The definitions that relate to advisers versus facilitators and the reporting requirements and provision of facilitators will have to be further defined. The report in Business Day dated 25 March 2003 mentioned that legislation was in the pipeline that would allow financial advisers to apply for an exemption under the Act to enable them to advise their clients to complete applications for contravention of exchange controls and tax avoidance and this is a clear indication that this Bill will have to be amended in future. And it’s imperfect in its present state.
Mnr die Voorsitter, hierdie wetsontwerp verwys ook na die toegang na betroubare inligting - die berging en domisilie van vertroulike inligting deur die Tesourie … [Mr Chairman, this Bill also refers to access to reliable information - the storage and domicile of confidential information by the Treasury …]
… and specific transgressions that relate to the Financial Intelligence Centre Act, the amnesty unit, its composition, etc, and the procedure to be followed to attain approval for amnesty.
The Exchange Control Amnesty and Amendment of Taxation Laws Bill is not a tax Bill that will result in forcing South Africans to pay more taxes. The basic aim is to curb money-laundering, bolster investor confidence and strengthen the rand in future to allow unaccounted assets held offshore to be repatriated into the South African economy.
The DA is a responsible opposition and we think it’s our duty to identify certain wording within this Act. We will abstain. Thank you, Mr Chairman.
The CHAIRPERSON OF COMMITTEES: Order! Hon members, the noise level is too high. Order, hon members!
Mr B A MNGUNI: Chair, there has been political amnesty in the form of the TRC. We are completing that process, and are now giving you economic amnesty to declare your sins, come clean and pay your taxes. The DA should take this opportunity with both hands and encourage its constituency to come clean and be responsible citizens.
Besides the amnesty given, this Bill also puts into effect the tax relief measures announced by the Minister in his Budget Speech. I would like to highlight a few of these. In order to encourage the acquisition of property, stamp duty is no longer applicable. Also, when you buy a house or a property, you no longer have to pay estate duty if the property is less than R140 000, and you pay a maximum of 8% if the property is valued at R320 000 or above.
Furthermore, to encourage saving, interest or dividends that accumulate or that are paid to individuals are no longer taxed if those dividends or that interest is less than R6 000 if you are below 65 years of age, or R15 000 if you are 65 and older. That will encourage saving, investment and economic growth.
Some of these issues were also highlighted by Dr Woods. As a result of the legal definition of “resident”, the companies operating in South Africa and elsewhere were able to avoid paying tax. This Bill tries to align those laws, taxes and treaties. We have tax treaties with other countries. This Bill aligns those treaties in line with the amnesty Bill to prevent companies from avoiding tax payment by claiming to be operating in another country, whereas they are operating in South Africa. This also helps prevent those individuals or companies from double taxation.
We said that big companies are not included in this amnesty. This is not due to discrimination but because of differentiation. As individuals we differ in salary scales and have different tax brackets. This does not mean that, because I’m in a certain tax bracket and another person is in another tax bracket, I’m being discriminated against. This is just because we belong to different categories of taxes. The same applies to companies. They are excluded from this amnesty because they belong to another differentiation, not because they are being discriminated against. Furthermore, there is another dispensation for companies because they were able to take some funds offshore.
Regarding the retention of records, unfortunately the DA has said from the beginning that the Bill is poorly crafted - even before we could finish the Bill. The reason was that they wanted each and every thing the powers of the amnesty unit, its functions and so forth, to be spelt out in the Bill or the Bill would not be properly crafted. They said that if we left all the powers and functions in the Bill to the Minister or whoever else, then they would become delegated regulations. We could put all those powers and functions of the amnesty in the Bill, then it would be cluttered and it would not be proper. That is why we left out those issues or from the powers and functions of the Bill.
Regarding the retention of records, the hon Taljaard knows that there will be no witch-hunt of people who disclose that they have taken money offshore. She herself knows that the Government will not yield and break its own laws, because she applied the Promotion of Access to Information Act. She wanted the Saambou report to be presented to her so that she could see what happened in the collapse of Saambou - official information that was sensitive for the economy of South Africa and was kept for the good of the country. The governor refused to give her that report because of state interest. She knows perfectly well that those records, if kept by National Treasury or Sars for that matter, are not going to be released to any government agency that is going to conduct a witch-hunt.
This Bill makes the economic environment in South Africa conducive to investment for anybody who wants to operate economically in South Africa. Therefore the DA must make sure that it goes back to its constituency and encourages people to apply for amnesty so that they come clean, and make a decent profit in South Africa without having a sword hanging over their heads. What will happen once the amnesty period ends is that whoever hasn’t applied and has got money overseas will face the full might of the law. Will the DA by that time be saying that they represented their constituencies properly? That would not be the case and it will only be their constituencies that will suffer, should they not apply for that amnesty. [Applause.]
The MINISTER OF FINANCE: Chairperson, I think it’s important for the record to go back to some of the rationale that informed the legislation and to issues that some members in this House are continuing to whinge about, because we’re no longer at the stage of asking questions.
The first issue relates to the exclusion of companies. Now, firstly, companies that had operated legally in South Africa, even under apartheid when they sought to be involved in sanctions-busting, did so with the approval of the Reserve Bank. Their position is a legal position.
What we cannot countenance is a situation in which we merely write off for those companies that have been involved in transfer pricing. It’s wrong, and if companies have acted in a way that violates not only exchange control legislation and in some instances, the Income Tax Act as well as the Companies Act, they can’t now seek exclusions and amnesty under the provisions of this Act. It’s wrong, it’s going to remain wrong, and we are not going to bring them into this or the next amnesty. I’m very clear about that.
If they seek a constitutional route, which I doubt that many of them would be foolish enough to attempt, they would merely be showing their hand because they would have been involved in subterfuge and illegal activity. In the present circumstances in the spirit of this legislation, we should not support them. They’ve been wrong; they will remain wrong in the eyes of the law.
In respect of the retention of records, except for Kazakhstan and perhaps that is the reference that the hon Taljaard makes, we can’t find any other circumstance in which records may not be maintained. In fact, in respect of successful applicants, it’s going to be important that their records can be referred to Sars or the Reserve Bank so that their matters can be brought into order, failing which they will remain on the wrong side of the law. This is because the Reserve Bank and the Revenue Service would be outside the evaluation of their applications.
In respect of the call that the Auditor-General be the custodian of the records, I think that diligent members of the committee would know that the Auditor-General has said that that was outside his purview. Also, we have a responsibility in terms of the National Archives of South Africa Act to ensure that we don’t just wilfully destroy records. That was the stuff of the apartheid regime. That is why we had such a paucity of information when we came into office in 1994, because they shredded like mad. We can’t repeat the same mistakes, so don’t ask us to behave in that way.
In respect of the issue of advisers and facilitators, yes, within the committee there were some individuals who may have been involved in some very bad activities who raised the issue of a witch-hunt. However, in terms of the position we’ve taken we are, in fact, very clear that we cannot open a witch-hunt. The legislation is clear, and I have no fear about the position and the distinction made between advisers and facilitators. That deals with the technical issues.
Let me deal with some of the other issues that have been raised. The hon Rabie sits here as a lawmaker. He’s had access to the legislation right since 26 February. We’ve participated, even though Parliament, in the context of a money Bill, doesn’t normally have the power to amend. We’ve allowed for engagement. Instead of using that facility, he refers to an article in the Business Day as though that is the authoritative source. Well, their journalist so often gets it wrong, Mr Rabie. [Interjections.] You can’t refer to that as authoritative when you have had the power in your hands, in respect of this legislation. That merely indicates why you are sitting on that side of the House.
In respect of the hon Aucamp … Ek weet nou nie of die “A” in “NA” deel is
van die “DA” soos die “FA” ook deel is van die “DA” nie. [Gelag.]
[Applous.] Ek weet nie of jy nou ‘n bietjie kruip by hulle nie, maar ons
los maar dit vir nou. [Tussenwerpsels.] [… I do not know whether the
A'' inNA’’ is part of the DA'' just as theFA’’ is also part of
the ``DA’’. [Laughter.] [Applause.] I do not know whether you are sucking
up to them somewhat, but let us leave it at that for now. [Interjections.]]
In respect of the hon Taljaard, your suggestions are actually quite impractical. They are uninformed. You can’t hold us to ransom. However, I think, very clearly they suggest why many of those who have taken money offshore, who would nominally have been supporters of the DP, would not want to associate with this party in the future. Thank you very much, Chairperson. [Applause.]
Debate concluded.
The CHAIRPERSON OF COMMITTEES: Order! I put the Bill with the textual corrections, as requested by the Minister of Finance, namely, one, that the word “or” in clause 10(1)(b)(iii) on page 9, line 33 be replaced by the word “and”; and, two, that the words “failed to confirm” in clause 10(1)(c) on page 9, line 34 be replaced by the word “confirmed”.
Bill, with the textual corrections, read a first time (Democratic Alliance abstaining).
EXCHANGE CONTROL AMNESTY AND AMENDMENT OF TAXATION LAWS BILL
(Second Reading debate)
There was no debate.
Bill, with the textual corrections, read a second time (Democratic Alliance abstaining).
The House adjourned at 17:59. ____
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS
ANNOUNCEMENTS:
National Assembly:
- Membership of Assembly:
(1) The following member vacated her seat with effect from 21 May
2003:
Madikizela-Mandela, N W.
- Referrals to committees of tabled papers:
(1) The following paper is referred to the Portfolio Committee on
Finance:
Strategic Plan of the National Treasury for 2003-2006 [RP 39-
2003].
(2) The following paper is referred to the Portfolio Committee on
Social Development. The Report of the Auditor-General is referred
to the Standing Committee on Public Accounts for consideration and
report:
Report and Financial Statements of the Disaster Relief Fund Board
for 2001-2002, including the Report of the Auditor-General on the
Financial Statements of the Disaster Relief Fund for 2001-2002 [RP
32-2003].
(3) The following paper is referred to the Portfolio Committee on
Justice and Constitutional Development:
Proclamation No R.40 published in Government Gazette Number 24804
dated 30 April 2003: Extension of the period of operation of
sections 51 and 52 of the Criminal Law Amendment Act, 1977 (Act No
105 of 1977), made in terms of section 53(2) of the Criminal Law
Amendment Act, 1977 (Act No 105 of 1977).
(4) The following paper is referred to the Portfolio Committee on
Health. The Report of the Auditor-General is referred to the
Standing Committee on Public Accounts for consideration and
report:
Report and Financial Statements of the Compensation Commissioner
for Occupational Diseases for 2001-2002, including the Report of
the Auditor-General on the Financial Statements of the Mines and
Works Compensation Fund for 2001-2002.
(5) The following paper is referred to the Portfolio Committee on
Health. It is referred to the Standing Committee on Public
Accounts for consideration and report:
Letter dated 9 May 2003 from the Minister of Health to the
Speaker, tabled in terms of section 65(2)(a) of the Public Finance
Management Act, 1999 (Act No 1 of 1999), explaining the delay in
the tabling of Annual Report and Financial Statements of the
Compensation Commissioner for Occupational Diseases.
(6) The following paper is referred to the Portfolio Committee on
Social Development. It is referred to the Standing Committee on
Public Accounts for consideration and report:
Letter dated 15 May 2003 from the Minister of Social Development
to the Speaker, tabled in terms of section 65(2)(a) of the Public
Finance Management Act, 1999 (Act No 1 of 1999), explaining the
delay in the tabling of Annual Report and Financial Statements of
the Disaster Relief Fund.
TABLINGS:
National Assembly and National Council of Provinces:
Papers:
- The Minister of Finance:
(1) Report of the Executive Officer of the Financial Services Board
on the Road Accident Fund - combined 8th Report for 2000-2001 and
9th Report for 2001-2002.
(2) Government Proclamation No R 16 published in Government Gazette
No 24967 dated 7 March 2003: Commencement of Revenue Laws
Amendment Act, 1999 (Act No 53 of 1999).
COMMITTEE REPORTS:
National Assembly:
-
Report of the Portfolio Committee on Foreign Affairs on Southern African Development Community Protocol on Politics, Defence and Security Co-operation, dated 21 May 2003:
The Portfolio Committee on Foreign Affairs, having considered the request for approval by Parliament of the Southern African Development Community Protocol on Politics, Defence and Security Co-operation, referred to it, recommends that the House, in terms of section 231(2) of the Constitution, approve the said Protocol.
Request to be considered.