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In a statement on Wednesday, 1 September 2021, the Department said the decision to withdraw the Green Paper, Gazetted on 18 August 2021 in the Government Gazette, is to provide better clarity on some of the matters entailed in the paper.
“Since its publication, there has been widespread commentary on the key recommendations entailed in the Green Paper. Some of the technical aspects of the proposals were not well understood and many have misrepresented the proposals, particularly on the National Social Security Fund.”
In addition to this, the Department further stated that it has become apparent that some of these areas need further clarification to avoid any further confusion. “By virtue of this being a discussion paper, the department is pleased by the level of public discourse on this subject matter, as it reinforces the fact that society should be involved in the policymaking space,” said the Department.
On 19 August 2021, the Newcastillian – Online News reported how the Green Paper on Comprehensive Social Security and Retirement Reform (2021) would impact South Africans.
One of the most notable proposals was mandatory contributions to a government-managed fund that would provide retirement, disability, and unemployment benefits.
In the Green Paper, the Department explained, “The most notable gap in our social security system is the absence of a mandatory contributory public social security fund that provides retirement, disability and survivor benefits to the workforce.”
If approved, the key reform proposal would offer a National Social Security Fund (NSSF), a centrally managed public fund to provide retirement, survivor, disability benefits, and unemployment benefits.
To keep the fund alive, all employers and employees in the country would have been obliged to initially contribute between 8% and 12% of their earnings. This scale is based on the Unemployment Insurance Fund (UIF) ceiling, currently at R276 0004 per annum. E.g. If you make R276 000 a year, you will pay 12% of that R276 000 a year – around R33 120 to the fund.
With the Department of Social Development now going back to the drawing board, AfriForum described the withdrawal of the Green Paper on Comprehensive Social Security and Retirement Reform by Minister Lindiwe Zulu as an important first victory for its tax protest campaign, launched on Tuesday, 31 August 2021.
According to Johan Kruger, Head of Community Development at AfriForum, more momentum must now be gained to bring about tax reform in South Africa.
The launch of the organisation’s tax protest campaign – which saw the release of a tax manifesto in which the civil rights organisation declares a dispute with the government and lists comprehensive demands – is, among others, in reaction to the publication of this green paper.
Further momentum must now be gained, and the government must simply be forced to consider AfriForum’s demands on behalf of taxpayers.
According to Kruger, AfriForum’s manifesto was sent to the office of President Cyril Ramaphosa on 31 August 2021.
The organisation expects the President and relevant ministers to meet with AfriForum to recognise the civil tax secretariat that AfriForum established to negotiate with government on behalf of taxpayers.
Kruger says, “We are pleased that other organisations and the broader public added their voices to our tax protest campaign. A united front against tax abuse and continued pressure for change will eventually compel the ANC to negotiate with AfriForum over its demands.”
Solidarity has also welcomed the withdrawal of the Green Paper. According to Dr Dirk Hermann, Chief Executive Officer of Solidarity, the Green Paper was absurd, irrational, unworkable and unconstitutional in its core.
Further stating, the withdrawal is a victory for taxpayers who pushed back. According to Solidarity, action must be taken against the Minister. In a statement, the trade union said, “The process caused a lot of damage and uncertainty.”
Solidarity will continue its resistance and legal action against the Green Paper if it comes to life in another form in the future.
What irked the trade union and others was that the Green Paper suggested that between 8% and 12% of employees’ salaries be deducted towards tax and ten percentage points extra tax be levied for an increased basic income.
Following the publication of the Green Paper, Solidarity started with legal action against Minister Zulu last week and gave 30 days for the Green Paper to be withdrawn.
Moreover, Solidarity’s legal letter pointed out that the correct process had not been followed. “However, it is not only the process that was wrong. The Green Paper is rotten at its core. It is impossible to take more tax money from taxpayers. It is worrying that such an irrational Green Paper was published as part of the legislative process. It creates uncertainty about policy amongst ordinary workers, businesses, and investors,” stated Hermann.
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