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"The Taxation Laws Amendment Bills contain the annual tax proposals as announced in the 2009 Budget Review. This legislation must be considered against the backdrop of the global economic slowdown and its impact on the fiscus.

Early indications at the end of May 2009 were that collection was already down by R 8bn on the expected revenue for 2009/10, given the slowdown in economic growth experienced. This will result in a far greater budget deficit than earlier estimated - resulting in increased public sector borrowing.

The tax proposals cover inter alia medical scheme contributions, tax-free interest and provisional tax for taxpayers over 65 years. Under travel allowances, the deemed kilometre method is to be repealed. All taxpayers (including MP's must now keep a log book of business travel if they wish to claim on their travel allowances.

The ACDP welcomes the two incentives in support of the environment, namely tax exemption for the sale of certified emission reductions and notional deductions for energy efficiency savings.

We support the capital gains primary residence exclusion of R2 million to deal with unintended consequences, since the word "gain" had not been defined with sufficient precision.

Whilst there are many positive aspects contained in the amendments, such as the adjustment to personal tax thresholds (which resulted in tax relief for individuals estimated at R13, 5bn) and incentives for learnerships and to protect the environment, a number of concerns were raised during the public hearings.

One of them relates to the ‘pay now argue later' principle. Whilst provisions exist for the taxpayer to request that payment be deferred until the dispute is resolved, the view was expressed that the application of this principle at assessment stage results in a fundamental and unjustified denial of the taxpayers right to be heard or the audi alteram partem rule. Whilst the ACDP appreciates that the amendments seek to provide clarity and fairness in terms of existing case law and international experience, Parliament may need to monitor this aspect and determine how many deferments are granted as well the number of cases where taxpayers were successful.

A further concern raised related to the proposed amendments to provisional tax, with presenters raising issues such as uncertainty and availability of data, as well as increased strain on business, tax practitioners, and SARS. Preference was expressed to an interest charge rather than the 20 per cent penalty as this would be fairer and in line with international practice.

The issues surrounding confidentiality as contained in section 4 were also raised in the context as to whether the proposed amendment as contained in clause 7 was a limitation on a taxpayer's right to privacy. In this regard, the ACDP welcomes the revised wording which provides exactly what information the Commissioner can disclose, whilst retaining a degree to flexibility to cater for business and practical developments.
The whole area of tax law remains extremely complex with a balance to be struck between the rights of the taxpayer and the needs of the fiscus.

In view of the global meltdown and sharply reduced revenues due to the domestic recession, the ACDP will support these amendments intended inter alia to enable the fiscus to honour its spending commitments announced in February this year. We can be grateful for the sound manner in which our fiscal framework has been managed over the years, which has given us the space for fiscal expansion, particularly in infrastructure spending, in these recessionary times".