Higher education minister tells Treasury where to get off

Blade Nzimande decrees that the skills development levy ‘tax holiday’ is a deferral.
Nzimande’s department says companies must keep paying the levy, including for May, unless they can ‘demonstrate’ they have applied for UIF Ters benefits as ‘proof of their financial distress’. Image: Supplied

It was expected that the Covid-19 pandemic would cause severe financial stress for businesses, and in March 2020 President Cyril Ramaphosa and Minister of Finance Tito Mboweni announced the first set of tax relief measures.

Over the next few weeks, additional measures were proposed, including a four-month tax holiday for skills development levies (SDLs). In other words, the SDL payments for May to August 2020 will not be deferred, but will be a permanent four-month tax relief.

Then this.

Ignoring established protocol of commenting on tax proposals, Minister of Higher Education, Science and Technology Blade Nzimande on June 4 issued a discussion document, turning the four-month SDL special Covid-19 tax holiday into a deferral.

Introducing tax legislation and amendments: the process

When the government proposed the Covid-19 extraordinary tax relief measures, the proposals were dealt with by the Ministry of Finance in accordance with the normal processes involved in introducing tax amendments: that of publishing the proposals in a bill for public comment.

On March 29, the ministry issued a media statement detailing the first round of relief measures, and announced that: “Together with the Commissioner of Sars [South African Revenue Service], National Treasury will also be considering additional exceptional adjustments to assist with Covid-19 relief efforts and to the tax treatment of newly-formed funds in this regard.”

The measures were given legal effect in terms of two bills: the Disaster Management Tax Relief Bill (Tax Relief Bill) and the Disaster Management Tax Relief Administration Bill (Tax Relief Admin Bill).

Read:

Explanatory memorandums were published explaining the relief measures, as well as the circumstances under which they would apply. The first draft bills were issued on April 1, and the second round published on May 19. The second draft tax relief bill included the proposed four-month SDL holiday.

The draft bills setting out the tax proposals, alongside the respective draft explanatory memoranda, were also published for public comment on the National Treasury and Sars websites. The bills were updated as new relief measures were added.

The bills are to be tabled when Parliament reconvenes later this year, for retrospective enactment.

Sars, which administers the collection of all taxes, has made the necessary adjustments in regard to the relief measures to its eFiling system.

Draft social partners discussion paper on proposed SDL holiday

On May 26, Nzimande held a virtual meeting with “the social partners, organised labour and organised business”, in which the tax relief measures were discussed.

The SDL Act is administered by Nzimande’s department. No details are provided in regard to the social partners, organised labour and organised business.

The virtual meeting led to a discussion document published on June 3. The discussion document refers to the Treasury’s projected revenue loss on the implementation of the SDL holiday to be R6 billion.

The social partners advised Nzimande that “investing in skills development is more critical during and post [the] Covid-19 pandemic, to address among others, productivity in the workplace and youth unemployment.”

Further, the social partners “acknowledge that not all companies are at the same degree of financial distress.”

Hence, the department decrees that “companies must continue with the payment of the SDL, including for the month of May, with the exception of those companies which can prove to be negatively affected by the Covid-19 pandemic.”

The discussion document further announces that the SDL payment holiday is a deferral, and that companies that apply for it will be required to “submit a plan on how to re-pay back [sic] the money in equal instalments within the financial year 2020/21”.

These companies must also “demonstrate” that they have applied for the Unemployment Insurance Fund’s Covid-19 Temporary Employer/Employee Relief Scheme (Ters) benefits “as a proof of their financial distress”. The document does not provide any details, such as to whom the plan and accompanying proof must be sent.

The document refers to the “means test approach”, stating that when finally “agreed upon and legislated in terms of the Draft Management Tax Relief Bill”, the department and National Treasury “will determine and oversee the modalities to realise the smooth implementation of the means test approach.”

Request for comment

Nzimande’s department was asked if it intends to take over the administration of the SDL (collection of levies and so on), how it would enforce the instruction that “companies must continue with the payment” of the levy, and how it intends to claw back the “loss” of the levies that have not been paid. It was also asked who the “social partners” are, and if their research is publicly available.

Treasury and Sars were asked to comment on the SDL tax holiday being turned into a deferral.

The only response received was from Sars, which said that it does not comment on tax policy. It is to be noted though, that Sars has already blanked out the SDL payment platform on eFiling for the months of May to August. Even if companies elected to pay the SDL, they wouldn’t be able to.

Does this signify cabinet discord?

It is of great concern that despite the Covid-19 tax relief regulations having been announced by the president and the minister of finance, and included in the tax relief and tax administration bills for public comment by National Treasury, Nzimande is having high-level meetings with unelected persons, and seemingly issuing changes to legislation.

Whiskey. Tango. Foxtrot ….

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The circus continues… and so does the race to the bottom.

Another day in Africa…

Firstly, great observance of the constitution and general laws by Hon. Blade. Another great example of how things are being made as we go along and how certain ministers make rules to suit themselves and/or their allies. Secondly, completely tone deaf to the plight of a private sector under economic siege and from where most taxes are generated for the fiscus. This is going to end badly with the inevitable hand-wringing like the minister with a fetish for camouflage who “never expected COVID-19’s crippling impact on the poor”.

This guy again??????????????

A case of the left paw having no clue what the right paws is doing.

They all want a little TV time, good for election time.

We have had one on Nuclear, another on advanced level 3, another on SAA all getting in on the act.

It is only the faithful 4% tax payers that understand, the rest think these clowns are rocker scientists.

I sometimes get the impression that the two camps are extending their internal battles in the public space with Zupta side doing its level best not to cooperate or to obstruct things for what remains of the rational side of the ANC.

There is no rational side in the ANC.

Blade is not the sharpest knife in the kitchen (I bet someone else has said this before) and I suspect very little of the Skills Development Levy is ultimately used to improve workplace skills in South Africa where they actually mean much. I stand to be corrected on both counts. Admittedly they may be biased, but I have only ever heard of employers complain about SDL and the way it is administered – a gravy train of note.
The number of jobs not created, the decline in growth and the high level of unemployment in the last 10 years in South Africa are indicative of the failure of the SETAs and Blade and his cadres. Someone needs to sharpen his meager skills – possibly he needs to give himself access to SDL funds.

End of comments.

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