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The Democratic Alliance (DA) welcomes Minister of Finance Pravin Gordhan's rejection of Minister of Communications Siphiwe Nyanda's proposal to earmark a 1% direct tax for the SABC. In a response to a Democratic Alliance parliamentary question released late on Friday, Minister Gordhan stated that the proposal "is not prudent" and "is not under consideration by the National Treasury".

A copy of the full reply follows below.

The tax proposal in question is contained within section 4(2) of Minister Nyanda's Public Service Broadcasting Bill. In its present form, we believe the bill constitutes a money bill, and would thus fail to pass constitutional muster, as it has been introduced by the Minister of Communications in violation of section 73 of the Constitution. We thus welcome the Minister of Finance's assurances that he has no intention of introducing such a bill.

Though the Treasury made it clear in November that it had not been consulted over the proposal, Minister Gordhan is absolutely unequivocal in his opposition to such a proposal. He points out in his reply, correctly, that earmarked taxes are inefficient, limit fiscal space, and make it difficult to hold departments accountable for their spending. This is in itself an extremely important point -- Minister Nyanda's proposal would see the SABC granted an annual windfall with very few strings attached. The precise reason the SABC is facing such a crisis at the moment is that it has failed to hold its own people to account, particularly in terms of their misspending. Yet the minister somehow thinks that giving the Department carte blanche in its spending will help to improve the situation.

PARLIAMENTARY REPLY:
NATIONAL ASSEMBLY
QUESTION FOR WRITTEN REPLY
QUESTION NUMBER 2243
DATE OF PUBLICATION: 13 NOVEMBER 2009
Dr D T George (DA) to ask the Minister of Finance:
(1) Whether the National Treasury has considered any proposals regarding the increase in taxation to fund the SA Broadcasting Corporation; if not, why not; if so, what are the relevant details;
(2) whether he intends introducing measures to ensure efficient taxation administration of such a tax; if not, why not; if so, what measures?
NW2952E
REPLY:
(1) No. The current policy is to keep earmarked taxes to an absolute minimum as taxes not only limit the fiscal space available to government, but also tend to be inefficient from both revenue and expenditure perspective. There is generally more accountability in spending when an entity is reliant on a user charge rather than an earmarked tax. It is not prudent to encourage a proliferation of earmarked taxes.
(2) No. Such a tax is not under consideration at this stage by the National Treasury.