Time constraints meant there was limited time available for organisations to make submissions on the fiscal framework at public hearings on Wednesday, the chairpersons of Parliament’s two finance committees said on Tuesday.
Chairperson of the standing committee of finance Yunus Carrim, and select committee on finance chairperson Charel de Beer explained in a statement that the Money Bills Amendment Procedure and Related Matters Amendment Act required that houses of Parliament finalise the fiscal framework within 16 days of the budget being introduced to Parliament. This is because the tax year begins on March 1 and the financial year on April 1 each year.
"Only after the fiscal framework is adopted can other aspects of the budget, such as the Division of Revenue and Appropriations Bill, be processed and they must be finalised within 35 days of the adoption of the fiscal framework," they said.
"We are, in fact, in the final stages of amending the Money Bills Amendment Procedure and Related Matters Amendment Act to give both the public and Parliament more time to process the budget. Understandably, there is significant opposition to the 1% increase in VAT," Carrim and De Beer said.
"In terms of the Value Added Tax Act, a VAT increase comes into effect on the date the Minister announces this in the budget. In this case, April 1 this year. Parliament has 12 months within which to accept, reject or amend the increase in some other way within 12 months,"
Parliament’s decisions on the VAT increase would be dealt with through the fiscal framework and the Rates and Monetary Amounts and Amendment of Revenue Laws Bill.
The chairpersons noted that should Parliament reject the VAT increase through the fiscal framework, alternative sources would have to be found for the estimated R22.9bn that would be raised through the VAT increase. "This will also involve consultation with the standing and select committees on appropriations," they said.
Carrim and De Beer said that the Rates and Monetary Amounts and Amendment of Revenue Laws Bill, which dealt directly with the VAT increases, was normally voted on in November every year. However, in view of the strong feeling about the VAT increase, the two finance committees were considering holding public hearings on the bill within the next few weeks.
"The public will have more time to make considered submissions on the VAT increase during the hearings on the Rates and Monetary Bill," they said.
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