The Standing Committee on Finance met on Tuesday to hold public hearings on The Draft Employment Tax Incentive Bill.
The main objective of the Bill is to provide for an employment tax incentive in the form of an amount by which employees’ tax may be reduced and to provide for matters connected therewith.
Presentations were received from various stakeholders, including the government, labour unions and civil society. The Bill was first announced by the President in the State of the Nation Address in 2010 to table proposals to subsidise the cost of hiring workers.
Briefing the Committee, the National Treasury said the youth subsidy was estimated to generate 423 000 jobs with net new job creation at 178 00. National Treasury Deputy Director-General Mr Ismail Momoniat said the objective of the Bill was to provide incentives to improve the employment prospects of young workers by giving them work experience.
“The tax incentive is meant as a temporary intervention. It is not a remedy for structural supply-side causes of youth unemployment,” Mr Momoniat said.
An amount of R500m for the 2012/13 financial tax year has been set aside, which will target 19- to 29- year-olds. Treasury further added that the Bill also seeks to draw on the private sector, as well as government and state-owned companies.
The public engagement process heard differing viewpoints from presenters. Labour unions (Congress of South African Trade Unions and National Union of Metal Workers of South Africa) called for the Bill to be withdrawn and to be abandoned in its current format.
Chairperson for the Committee Mr Thabadiawa Mufamadi welcomed the submissions from stakeholders. “The issues that have been raised today have been thought-provoking and critical, and have given us a lot to think about,” Mr Mufamadi said.
“What is important is how we ameliorate unintended consequences, such as the different wages to the new entrants in the employment industry,” Mr Mufamadi added.
The Committee will take note of the important issues that emanated from the discussions – the fear of displacement of particular age groups, the downward pressure in wages; the application of special economic zones and the delinking of the tax incentive from skills development.
“What is important is that the processes and initiatives that have been developed cannot be thrown away as that will render us not serious,” he added.
“The question remains as to how we address youth unemployment,” Mr Mufamadi said. In his concluding remarks he said, “We have a proposal that has been tabled and what is important is how we enrich it, as we cannot engage forever.”
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Yoliswa Landu
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