The ANC caucus in Parliament yesterday came out strongly in support of “the objects of” the Employment Tax Incentive Bill – which is also known as the youth wage legislation – which is before Parliament’ standing committee on finance.
Spokesman Moloto Mothapo said the bill was “one of the necessary and progressive interventions in the battle against the unacceptable rates of unemployment in our country, particularly among young people”.
The employment tax incentive sought to encourage the absorption of young people, between the ages of 18 and 29, “in mainly the private sector” by decreasing the amount of tax that is owed by companies through the pay-as-you-earn system, he said.
The caucus statement comes in the wake of Treasury director-general Lungisa Fuzile’s warning that Nedlac could not “usurp” the powers of Parliament and the executive to table legislation.
He argued that the Nedlac Act – which governs the body made up of business, labour and government and processes socio-economic legislation applying to labour – only sought to seek consensus on such matters. It did not have the power to block legislation.
Moloto pointed out that for a qualifying employee, the bill proposed that in the first 12 months of employment the monthly value of the incentive was 50 percent of the monthly salary of an employee “up to a salary of R2 000”. Thereafter, the subsidy was R1 000 for those earning between R2 000 and R4 000 a month. The incentive decreases from R1 000 to zero on a sliding scale for qualifying employees with a salary between R4 000 and R6 000.
The government estimated that the tax expenditure would cost between R1 billion and R2.3bn over the next two years.
“The intervention will be reviewed after two years to determine its effectiveness,” Moloto said.
This puts the ANC caucus on a collision course with its Cosatu allies, in particular with the National Union of Metalworkers of South Africa, which says if it is imposed, mass strikes could ensue.
The ANC, however, said it was “hopeful” that the bill would be implemented by January, well ahead of the national election, which is expected mid-year.
French super tax
How much sympathy will French taxpayers feel for French soccer clubs threatened by a 75 percent super tax on that part of employees’ annual salaries that top e1 million (R13m)? Reuters said the 75 percent tax rate was initially to be paid by those earning more than e1m a year.
“After protests by top French executives and actors such as Gerard Depardieu, the government changed the law so that it would be payable by the companies offering such salaries.”
The tax will now apply to annual company revenues and football clubs will be treated like any other company. It appears that, for whatever reason, football bosses had expected the clubs to be exempt.
Public opinion is usually in favour of a swinging super tax because it makes ordinary taxpayers feel better. In European countries, pursuing austerity policies that are felt most by the less well off, a super tax should be popular among the rank and file. However, football players may be a special case, given their important role in the global psyche.
The clubs, claiming they face bankruptcy, are threatening to strike, which will mean a weekend without a game, according to reports. And they are arguing the imposition of the tax will see France lose its top players. Presumably then, losing top players in other fields should not concern anyone. Who needs, for example, experts in electronics or pharmaceuticals or some other frivolous field, when they can keep the important people – the football players?
While football players may have delusions of grandeur, their arguments apply more generally. The problem is that politicians like to be seen to be doing things. Lots of things. The merits of the things they do are less important than the photo opportunities afforded by announcing plans and launching initiatives.
It may take the football clubs to bring the message home to French President François Hollande.
Trevor Manuel, the Minister in the Presidency and godfather of the National Development Plan (NDP), has lambasted the information and technology industry for complacency while South Africa slipped down the various competitiveness indices.
Manuel was speaking at the eighth government technology conference, held in Cape Town earlier this week.
He reflected on advances in cellphone technology, the potential of the Meraka Institute, which is based at the CSIR in Pretoria, e-government and e-cabinet advances, including the commitment to open source which had subsequently been lost.
“Techies, why have you allowed this to slip on your watch and what will you help us do to catch up?” he challenged the audience. He highlighted positives: the 2011 Census and the accessibility of the statistics, including an innovation that will become available and which allows one to track the national plan via a cellphone or other mobile device.
Manuel warned against technology becoming a great divider, “and to never allow ourselves to be delayed by silliness again”, he said referring to delays in the landing of the Seacom undersea broadband cable. “The landing of six undersea cable systems allows us to take bandwidth to rural areas, to narrow the gap between urban and rural areas, rich and poor, black and white, men and women.”
But he said our peers such as Kenya and Rwanda had stolen the march particularly in internet penetration where South Africa once led. Manuel, who claimed to be passionate about a Silicon Valley type set-up in South Africa, said he was engaging ex-patriots based in the US Silicon Valley.
Then, he challenged the industry to tackle eight areas including e-government and access to services, education, health care, billing and open source. One doesn’t know what to make of a body that begs from the hand it bites.
Edited by Peter DeIonno. With contributions from Donwald Pressly, Ethel Hazelhurst and Asha Speckman.