Carbon Tax Bill: finalisation & voting; Financial Matters Amendment Draft Bill: briefing

Carbon Tax Bill: finalisation & voting; Financial Matters Amendment Draft Bill: briefing

• 19 December 2019
• Corporate Tax
• Parliamentary Monitoring Group

Monday, 11 February 2019

Important:

This article is based on tax law for the tax year ending 28 February 2019.

Author: Parliamentary Monitoring Group

The Committee met with the National Treasury for finalisation and adoption of the Carbon Tax Bill. The Committee also received a briefing and discussed the Financial Matters Bill.

National Treasury highlighted that the Carbon Tax Bill was formally tabled in November 2018. It reflects some of the input received during last year’s parliamentary hearings – summarised in a National Treasury response document presented to the committee on 4 December. The entire drafting process was informed by stakeholder consultations which begun nearly 10 years ago. Its overarching objective was to incentivise medium-to-long term behaviour change on the part of producers and consumers alike. On subsequent amendments, Schedule 1 had been changed to reflect a default calorific value of 0.0243 per tonne of ‘other bituminous coal’. Schedule 2 had been changed to reflect new figures in respect of: industrial processes and product use involving carbonates, ceramics, soda ash and non-metallurgical magnesia; and the metals industry.

The Chairperson pointed out that apart from the formal parliamentary meetings, on the recommendation of the Committee, Treasury and the Department of Environmental Affairs (DEA) met with stakeholders several times to process aspects of the Carbon Tax Bill. This came on the top of continual exchanges between Treasury and DEA since 2011. He took the Committee through the B-version of the Bill page by page. He noted there were no reservations to the amendments from Members, and put the Carbon Tax Bill up for adoption. The Carbon Tax Bill was adopted. The DA reserved its position on the Bill. 

National Treasury indicated that the Financial Matters Bill was published for comments on 24 August 2018 with closing date of 14 September 2018. It was subsequently introduced in Parliament on 31 January 2019. The Financial Matters Bill was published for comments on 24 August 2018 with closing date of 14 September 2018. It was subsequently introduced in Parliament on 31 January 2019. The Bill seeks to amend: Insolvency Act, by ensuring that government’s international objectives for enabling over-the counter (OTC) derivatives transactions with international counterparties; Military Pensions Act, by introducing gender neutrality and recognising various forms of legal marriages for purposes of benefits for all military staff; Banks Act, to enable qualifying state-owned companies to apply for banking licences subject to executive approval; Government Employees Pension Law, by introducing principle of “service reduction approach” to ensure that member’s pension pay-outs to former spouses upon divorce are not converted to debt obligation as is case under current approach; and Auditing Profession Act. On proposed amendment to the Banks Act, Treasury highlighted governance conflicts presented by state banks. International experience, and South Africa’s own experience suggests that state ownership of banks has potential to undermine prompt corrective action by prudential regulators. Prudential regulators sometimes forbear (i.e. they do not apply full regulatory measures) when faced with failing state banks due to the reluctance to frustrate what could be viewed as government policy or programs. This is undesirable as the prudential regulators are duty-bound to level the playing field. Prudential regulators must maintain an environment in which all entities operating in the banking sector adhere to the same principles in order to be supervised effectively.

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This article first appeared on pmg.org.za.

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