as Chairman, presented the First Report of the Select Committee on Irrigation Matters.

Report and proceedings to be printed and considered in Committee of the Whole House.

as Chairman, presented the Second Report of the Select Committee on Irrigation Matters.

Report and proceedings to be printed and considered.

Mr. Speaker, with regard to the business of the House for next week, I wish to announce on behalf of the hon. the Leader of the House that on Tuesday, 8 June, precedence will be given to the Third Reading of the Appropriation Bill.

For the rest the House will dispose of the Order Paper, as printed.

Mr. Speaker, I move—

Since 1968 the Commission for administration has from time to time delegated the powers vested in it in terms of the provisions of section 5(2) of the Public Service Act, 1957 (Act 54 of 1957), to officials in departments, and to a great extent departments are already able to deal with specific day-to-day matters themselves, under delegation. For example, at present departments deal under delegation with the creation and abolition of 84% of the total number of posts supervised by Commission.

As far as appointments are concerned, approximately 94% of all appointments are already done by departments themselves. In the case of promotions, departments deal independently with approximately 90% of all promotions.

As a result of the responsible and successful way in which departments have used these delegated powers, the Commission’s initial approach of selective assignment of powers in 1968, has evolved into a policy of selective retention of those powers that are essential for the effective functioning of the Public Service as a whole. As a result, in 1980 the Commission saw fit to investigate the possibilities of the further transfer of powers, and the way in which this transfer should take place. On the one hand, it was found that the powers transferred to departments could be extended, and in view of this the Commission approved in principle that the powers of departments in respect of, inter alia, the creation, abolition and grading of posts and the appointment and promotion of persons, up to generally speaking, the level of Administrative Officer, should in future in most cases be extended to the level of Assistant Director in the administrative division and to comparable levels.

The transfer of these greater powers to departments could not, however, take place as yet, because on the other hand it was also found during the said investigation that the delegation of Commission powers to officers in departments was inconsistent with recognized principles of administrative law relating to delegation, because such officials who submitted recommendations on behalf of the Commission do not fall under its control, but are answerable to the relevant Minister or Administrator. The way in which the transfer of powers to departments took place was accordingly revised, and the existing powers of delegation to departments are to be replaced by the assignment mechanism proposed in clause 4.

Clause 4 provides that the State President may by proclamation assign a matter on which the Commission must make a recommendation, or give a direction, to a Minister, Administrator, or incumbent of a post in a department, and that the office-bearer or incumbent to whom such authority has been assigned, may act at his discretion in respect of the relevant matter. However, his action is subject to the conditions also specified in the proclamation, and to the statutory provisions applicable when the Commission itself makes a recommendation or gives a direction in respect of such matter.

The Government and the Commission do not see a reduction in parliamentary control in the measure embodied in clause 4. In the first place, no proclamation will be issued, withdrawn or amended except on the recommendation of the Commission. Understandably, this affects the nature of the matters which may be transferred, and the conditions under which office-bearers and incumbents must deal with a matter assigned to them. In the second place, the same statutory provisions as would apply to the Commission in connection with any matter, apply to departments dealing with that matter. In the third place, in terms of the powers vested in it by section 8 of the Act, the Commission, will satisfy itself by means of reports and effective inspection programmes that the administration is in fact proceeding in accordance with the prescribed policy, practices and principles. The provisions of clause 4, and the control measures embodied therein as well as in the rest of the Act, strike the most responsible balance between the need for adequate central and parliamentary control over the central State services on the one hand and on the other, the need for departments to continue with their activities without red tape and delay.

The proposed amendment of subsections 3(l)(b), 3(l)(c)(ii), 5(3), 6(2)(h) and 6(3) are consequential to the insertion of section 5A as set out in clause 4. In addition, specific sections in the Act were deleted by a previous amendment and others have therefore been renumbered accordingly. Unfortunately, however, the reference to these sections was not corrected in section 5(3). Correction will be effected by means of the amendment of this section as proposed.

As a result of the speeded-up programme of parity in respect of salaries and other conditions of service, there has been a considerable increase in the number of classes of post which the Commission in terms of section 3(3) of the Act, has directed to be removed from one section of the permanent establishment and classified in another section. At present it is no longer practical to publish all these changes in the Gazette in terms of the provisions of section 3(4); that is the reason for the proposed deletion of the relevant section.

As hon. members know, section 14(10A) of the Act provides that an officer appointed to a post in terms of a provision of an Act of Parliament to which the provisions of this Act do not apply, can retire from service with a pension. However, the Act is silent on the retirement and pension position of a member of the Commission who, before his appointment as such, was an officer or employee in the Public Service and was appointed to a post in the same circumstances. This deficiency is being eliminated by the insertion of section 4(15), as proposed in clause 2.

The proposed amendment to section 5(5) of the Act requires no further explanation. In order to specify the powers of the Commission with regard to training in the Act, the amendment of section 6(2)(f), (k) and (1) is proposed. The importance of training, which to date has been dealt with by the Commission in terms of the provisions of section 6(l)(b) of the Act, justifies such mention.

The present section 11(2)(c) of the Act provides that the Commission must itself ascertain and declare that a person is healthy for purposes of permanent appointment in the Public Service, or if such a statement cannot be issued, must lay down conditions for appointment. In practice, however, the Commission lays down requirements which a person’s state of health must comply with for purposes of appointment, while departments themselves, under delegation, perform the tasks assigned to the Commission in the specific section. The proposed insertion of section 6(2) (nA) and amendment to section 11(2) are aimed at embodying existing practice in the Act. For the sake of completeness, it is also deemed necessary that the provisions of section 11(3) be extended so that when a post is filled or an appointment made, in addition to the existing provisions of the relevant section, account is also taken of the conditions prescribed for such action or directed by the Commission. A suitable amendment of the relevant section is therefore being proposed.

The proviso to section 11(4) of the Act provides that when the Commission recommends the appointment of a person from outside the Public Service to a post in the administrative section of the permanent establishment, it must furnish details of such appointment in its annual report to Parliament. On the one hand, there is at present no reason why there should be a distinction drawn between the administrative sector and other sectors of the permanent establishment in this connection. On the other hand, former officers and university students who have completed their studies, are to an increasing extent being appointed directly to posts in the administrative section. The appointment of persons from outside the Public Service to posts in the administrative section is therefore no longer an unusual event, and need not therefore, be treated as such any longer. The deletion of the relevant proviso is therefore proposed.

According to the present provisions of section 12(1), appointments, transfers and promotions on probation take place if the Commission recommends accordingly, or, in the case of posts in the general B division on department authorization. In practice almost all appointments are on probation, whereas this is very seldom the case with transfers and promotions. With a view to giving departments greater independence as regards appointments, transfers and promotions, it is essential to reflect in the legislation the practical implementation of the section. This is the specific aim of clause 7.

Although in practice employees can also be seconded to the bodies mentioned in section 13(6) of the Act, the section only makes provision for the seconding of officers. However, section 24(5) of the Act contains directives in connection with the financial side of seconding affecting both officers and employees. The proposed amendment of section 13(6) by the insertion of a reference to employees, eliminates an existing deficiency in the Act.

Mr. Speaker, we on these benches, representing the PFP, will support this Bill even though it poses more questions than it answers, particularly in regard to clause 4, which is the clause around which the whole Bill revolves. In terms of section 5(2) of the present Act, delegation of power either special or general, has been vested in Ministers and Administrators since 1968, as has been mentioned by the hon. the Minister, and the following are the totals of the delegations: 84% of all creation of posts in the Public Service; 94% of all appointments to posts in the Public Service and 90% of all promotions of posts in the Public Service. We have been informed that when this legislation is promulgated, these percentages will increase only slightly, i.e. to 90%, 96% and 94% respectively, and that all administrative and clerical divisions will be assigned to departments. However, the grades of Director-General, Deputy Director-General, Chief Director, Director and Deputy Director will still fall under the direct control of the Commission. It must be remembered that delegation no longer exists because the powers are going to be assigned. We trust the Commission has ensured that it has all the checks and balances to ensure that no Minister or Administrator abuses this assignment because they have been handed over permanently. However, it would appear that since 1968 there have been no difficulties whatsoever with Ministers and Administrators, and the system should therefore continue to run smoothly. Nevertheless, the Commission and the Department of State Administration must ensure that every department keeps in step.

Let me sound a word of warning in regard to further dangers which I see in this assignment. It is possible that there will be too much divergence between departments, and consequently there is a possibility of intense competition for staff between the various departments acting on their own. I hope that the hon. the Minister and the Commission will see that this does not happen. I trust that the Commission will monitor this situation at all times in order to prevent this competition from occurring.

Clause 1 in view of the above means that all Public Service posts in the fixed establishment as well as employees, either temporary or contractual, can be filled by the departments themselves and that further reclassification need no longer be advertised in the Government Gazette.

Clause 2 correctly ensures that any member of the Commission, who normally was a very highly respected and experienced public servant before his appointment to the Commission, may be, on completion of his term of office with the Commission, required by the State to continue to provide his excellent services and experience in the interests of the State, and rightly so. This ensures that his pension rights are guaranteed, and we fully approve of that.

Clause 3 lays down many very important functions which the Commission may not delegate, and this is right that this should be so. These are, inter alia, the retention after retirement age, early retirement and, more important than anything else, discharge from the Public Service for various reasons.

Clause 5 now includes under the Commission’s powers the training of officers and employees, as well as the medical standards which are required for entry to the Public Service. In addition, as more appointments are made by departments, there must be uniformity of conditions, and this satisfies this side of the House.

Clause 7 rightly ensures that all initial appointments, transfers and promotions in all departments shall be on probation. This is also a correct step.

Clause 8 now allows for the secondment of employees for a particular service and for a particular period of time.

Because of all this we fully support this Bill.

However, as I said at the beginning, this Bill poses as many questions as it answers. During the discussion on the Part Appropriation Bill on 22 February 1982 I asked whether the Public Service Commission in trying to seek a principle which might govern the levels of pay of public servants can choose between the principle of fair relativity, i.e. paying what is paid for the same work in outside industry and commerce, and the principle of the model employer, i.e. being the leader above commerce and industry, so that people will clamour to join the Public Service as they do in a country such as the United States. I have received no answer to that question. I believe it is a question which the hon. the Minister should answer, as to which principle the Department of State Administration should follow.

However, when I tried to find out who really was the employer of the public servant in South Africa I was surprised to find out that there really was not one employer. It could be either the hon. the Minister, the Administrator, the Commission for State Administration or the Treasury. The hon. the Minister of State Administration is really the Minister in the middle, between the other Ministers and the Administrators on the one hand and the Treasury on the other. I believe that the Public Service Act, 1954, as amended, should be further amended to make the Minister of State Administration, the legal and only employer of the public servant. He should be the chairman of a management committee for the employment of public servants. This management committee should have on it the hon. the Minister of Finance or his representative, and the Commission for State Administration. Thus the hon. the Minister of State Administration will be the employer of the public servant, assisted by the hon. the Minister of Finance, who has to supply the necessary funds to pay the employees, and the Commission for Administration to provide the necessary expertise on conditions and adequate pay for service. This is a recommendation in principle and can be expanded upon by the Commission for Administration, who have a far fuller knowledge of all the ramifications of the Public Service.

I should now like to deal with another point. It is pertinent to the smooth running of the Public Service that there should be some means of negotiation between the Commission and the Public Servants’ Association, the official representative organization of the Public Service. For this purpose section 25 of the principal Act deals with the establishment and functions of the Public Service Joint Advisory Council on which the Public Servants’ Association of South Africa and the Commission for Administration serve, each having six members. However, the six members appointed by the Commission for Administration are also members of the Public Servants’ Association. The result is that officers talk to officers. Secondly, the Commission is not compelled to act on any recommendations or resolutions taken by the Joint Advisory Council. Thirdly, both the Commission and the Public Servants Association have found the Joint Advisory Council to be an ineffective channel, and the annual reports that are issued by the department and the Commission for Administration show how seldom this body meets. It also seems that no discussions on pay appear to have taken place, and that only certain limited conditions of service have been discussed. Consequently, over the past two years there has developed, I believe, an informal form of communication, with the Public Servants’ Association meeting directly with the hon. the Minister for State Administration and the Commission for Administration. From discussions I have had and from information that I have received, it seems that these relationships have been most cordial, and discussions appear to have been conducted in an atmosphere of mutual confidence and understanding. What has by custom become established is a de facto kind of negotiation procedure that appears to have served all parties very well. What is now required—and I put this to the hon. the Minister for his earnest consideration—is that this modus operandi should be legally ensconced by Parliament. With the formation of the management committee previously mentioned, it should be laid down by statute that such management committee shall be obliged to discuss any matters pertaining to general service conditions with the Public Servant’s Association, before decisions by the Department of State Administration are finalized. I hope the hon. the Minister will consider this very seriously indeed.

In conclusion, I feel that the suggestions that I have made will bring peace and prosperity to the Public Service as a whole, and I trust therefore that these recommendations will receive the consideration of the hon. the Minister.

Mr. Speaker, I trust that the hon. the Minister will give careful consideration to the proposals of the hon. member for Bezuidenhout. I personally believe that on the road ahead we can fruitfully consider the establishment of a mechanism to negotiate more meaningfully with the officials, and subsequently, to be able to put the decisions into effect more effectively. The hon. member was quite right when he said that the Public Service Association has held constant discussions with the hon. the Minister and the executive, and also with the Commission for Administration, which is actually an extension-piece, or the so-called agent, of Parliament. We are grateful that the official Opposition supports this Bill, because we believe that in general it will lead to an improvement in the present position in the Public Service.

I should like to take this opportunity to say a few words specifically regarding the matter of greater departmental self-management. We also raised this matter recently during the discussion of the relevant Vote, and in addition, it is mentioned in the report of the Commission for Administration which has been tabled. I personally believe that in future we shall most definitely have to give detailed consideration to the Public Service and the effective functioning of the State machine, and I am pleased about the mechanism created in the Bill to make provision for this.

In clause 3 certain aspects are, however, excluded, and there are therefore certain matters concerning which departments are not being afforded sufficient self-management. It is in this connection that I want to bring one aspect to the attention of the hon. the Minister. I refer to section 6 of the Public Service Act, No. 54 of 1957. One of the aspects excluded from departmental self-management is indicated in section 6(2) (g). This provision reads as follows—

What the hon. member who has just spoken said is true, because in fact one wants a certain uniformity in the State machine. However, it is equally true that if we want greater departmental self-management we shall also have to consider the mobility of salaries. We in South Africa certainly do not want the situation of one department competing with other departments for the services of people and salaries becoming excessively high in the process. Bearing in mind the essence of the aim of greater departmental self-management, one must, however, ask onself whether, by way of this measure, we really want to establish self-management. The hon. the Minister mentioned that the departments themselves decide on 84% of the posts created 94% of appointments and 90% of promotions. However, there is a real problem. The intention is now to allow departments to take their own decisions up to the level of Assistant Director. At present the departments themselves only take certain decisions up to the level of Administrative Officer. Along with other hon. members, I am therefore delighted that the departments can decide for themselves up to the level of Assistant Director. However, in practice one of the main elements of appointments revolves around the question of salaries. People apply, and one must often decide in a hurry whether one wants to appoint a man or woman to a specific post. If, therefore, one commits departments to fixed salary scales and notches, and appointments are made according to qualifications and experience for which only a specified salary can be paid, the Director-General and his top people—who we want to allow to exercise greater departmental self-management—may be hampered a little too much on occasion. I therefore want to ask the hon. the Minister that the executive give this aspect more specific consideration in future. If we lay down broad guidelines in South Africa, viz. that we should have the Public Service do as little work as possible so that we can reduce the role of the Government sector, we shall utilize our manpower better. I believe there are many other mechanisms to prevent one department from competing unnecessarily with another for the services of the same people by offering higher salaries. However, if we give the greatest possible practical content to departmental self-management by allowing a little more mobility with regard to salaries, then in my opinion we shall be able to provide better administration in South Africa in the future.

There is no doubt that the Public Service, like the entire economy, is in many respects suffering from a staff crisis. We in this House would therefore be living in a dream world if we were not honest enough to admit frankly that disturbing elements are coming to the fore in our Public Service as a result of the shortage of manpower and that there are certain services which, due to the lack of manpower, cannot be rendered properly. If we also consider the tremendous problems this country is already facing, every hon. member in this House will agree that we shall have to make our State machine as streamlined as possible in future. Accordingly I believe that this measure can make a further contribution, on the basis of greater departmental self-management, to enable our State machine to make important decisions for our country better and more rapidly in the future.

With these few words I should like to express our thanks to the Opposition yet again. We on this side should like to express our thanks to the Commission for Administration for the good work being done in the interests of the Public Service, and also express the hope that in future, with Parliament as its partner, a great deal will still be done by the Commission for Administration regarding the welfare of our officials. I believe our aim must be to make all officers in South Africa as financially independent as possible; to pay good salaries for good work. I believe that these measures can be a further instrument towards achieving this aim.

Mr. Speaker, we on this side of the House support the Bill. An effective Public Service is important and essential, not only with regard to its external, but also with regard to its internal functioning. For the most part this amending Bill is concerned with internal measures which will obviously lead to greater effectiveness and should also bring about greater satisfaction among civil servants.

Without detracting from the importance of all the other clauses in this Bill, I am convinced that clauses 4, 5 and 6 are of the greatest importance to us. Clause 4 concerns the assigning of a specific power which was previously assigned by primarily means of delegation. I feel that the relevant clause is a most effective step forward and that in future it will be of great importance to the relevant departments. At first glance it appears to be a reduction in or interference in the authority of the commission, but in actual fact it is an advantage in the sense that where the responsibility and also the accountability lie with the department, the Minister, the Administrator and the specific head of department, the commission now has the opportunity to demand more objective accountability and answerability from a specific department with regard to the implementation of the proclamation it receives. I think it will also be of great value to specific officers in a department who want to lodge an appeal, because they can now lodge an appeal with the commission in the knowledge that the commission was not initially involved in their appointment or promotion, or their non-appointment or non-promotion. I believe that this clause is very important. It was not quite clear to me whether the hon. member for Bezuidenhout had problems with a permanence which is supposed to be built into this clause, but in my opinion there is no inherent permanence here. It seems to me that what is at issue here is that no proclamation may be issued, amended or withdrawn unless the commission has agreed to this. What is at issue here is therefore not a permanent assignation, but an assignation concerning the decision of the commission.

Another aspect which in my opinion is of the utmost importance is the provision that is being made in clause 5 for the training of officers which has become essential at this stage. This not only involves training but also a development mechanism which is being built in from the start to develop officials into excellent managers and to allow them to achieve excellent managerial ability. I believe that this development is also a very sound and to the advantage of the Public Service as a whole.

Another matter which is of great importance to me personally is the matter which is referred to in clause 6. This deals with the health aspect. It is true that the commission lays down the general provisions and requirements in connection with health which the department must take into consideration with regard to promotions and particularly appointments. However, I want to make a very serious appeal for far better use to be made of the provisions made for appointments on probation, because I have ascertained that whereas temporary appointments are not eligible for a pension, appointments on probation are. I myself am personally aware of a few cases of people who battled for years to obtain a permanent appointment because they were always hampered by certain health requirements. If these people had enjoyed the benefit of an appointment on probation, and could therefore claim pension benefits, they may have remained available to the Public Service, whereas we have now lost them. I do not want to go into details now regarding specific cases because I do not believe this is really necessary. However, I do believe that with the help of the commission it should be brought much more specifically to the attention of the respective departments so that everyone can take cognizance of this provision which has been made for appointments on probation and the way in which these are affected by health matters.

Pensions do not only involve the contribution of the State, but also the contribution of the employee. I believe that the contribution the State makes to the pension of an employee should not be measured against the contribution as such, but against the effective service the particular official can render. If a person can in fact be used for a long time in the service of the State, irrespective of health problems, if he can function efficiently and can render good service, and can also make a contribution, I feel this ought to carry more weight than the deterrent factor of poor health and the danger of an employee possibly having to leave the service after 10 or 12 years for health reasons, and therefore having to receive pension benefits. I feel that the efficient rendering of services by the particular official must serve as a criterion in cases of this nature.

It is a pleasure for me to support this legislation. In conclusion, I, however, want to refer to clause 6 of the Bill. The proposed new section 11(3) reads as follows—

It seems that the word “relative” has been in the principal Act for many years. In this specific connection, I feel that this word does not really have any meaning. It could just as well have been left out. It is not stated in this way in connection with efficiency and suitability, as we find it in the new subsection. Why should merit suddenly be made relative? It means absolutely nothing to me. When this legislation is revised in future, I feel that word could very well be deleted for the sake of convenience.

I also want to express the hope that this statutory amendment will really satisfy all public servants, and that it will also improve the functioning of the respective government departments.

Mr. Speaker, the official Opposition’s chief spokesman on matters concerning the Public Service, the hon. member for Johannesburg North, has announced that he is going to resign as a member of Parliament. We on this side of the House want to wish him everything of the best, and we also hope that he will enjoy much better health in the future.

The Bill under discussion contains many amendments, which are aimed mainly at streamlining and ensuring the more efficient functioning of the Public Service. As a result of the size and—as some people allege—the clumsiness of the Public Service, it is necessary that new measures be constantly introduced to encourage greater efficiency. The transfer of powers at present vested in the commission to the respective State departments will merely result in certain matters being dealt with more speedily and with fewer delays.

However, I want to concentrate more specifically on training in the Public Service, and in this connection I want to refer to clause 5 of the Bill under discussion. In the first place I want to express my concern about the fact that at present the Public Service must serve as a training centre for refined posts in the national economy. Every year the State’s bursary scheme is fully utilized, and by means of the grants attempts are made to accommodate the scarce fields of study. In future computer technology will become ever more important in our national economy. We are going to need those people. This also applies to engineers, medical doctors, geologists, etc. They are all of essential importance to the Public Service, and it is necessary that they be available to ensure effective functioning.

Unfortunately it is a fact that highly qualified persons, just like well-trained administrative officers, are and remain a highly marketable component in the provision of manpower. These people are still very much in demand in the private sector as well. That the Public Service is still prepared to train and provide sophisticated white-collar workers and then lose them to other sectors is a constant source of concern to me.

I have had occasion to refer to this matter before, and to ask for measures to try to prevent this, by, for example, including a penalty clause in the contract drawn up when bursaries are made available. The buyer of such a bursary holder must not only be prepared to compensate the bursary costs of the relevant applicant; he must also make an additional contribution or be fined so that someone else who has already been trained can be appointed.

We are grateful that the commission considers this so important that it is now deemed essential to incorporate it in the Act. It goes without saying, however, that training is not only meant for one population group. The training of people of colour in the national economy obviously remains just as important as the training of Whites. I believe that in future every population group will to a large extent have to rely on the expertise, academic maturity and administrative and technical skills of their own people to deal with and conduct their own affairs in their own areas. That is why in future training will have to be accorded a far greater and higher priority in the national economy.

It is therefore a privilege for me to support the Bill.

Mr. Speaker, we in the NRP shall support the Second Reading of the Bill. We believe its main purpose is to streamline the Act to suit present day standards and conditions. I shall, however, raise one query in respect of clause 6(d), but I shall refer later to that.

Clause 1, as we see it, is to be welcomed as it gives authority to the department to make the final decision in respect of those people who are appointed in addition to the number of posts on the fixed establishment and also in respect of those appointed on a contract basis.

Clause 2 seeks to rectify the absence of clarity in respect of the pension of a commissioner who is appointed from an office which does not fall under the provisions of the Act. This provision is very welcome.

Clause 4 is really the meat of the whole Bill as we see it. The whole Bill revolves around clause 4. Clause 4 is welcomed because we believe it constitutes a very definite step in streamlining the whole organization. It also will result in obviating that “double delegation” as one might put it. This, too, is to be welcomed.

Clause 5 is more definitive in so far as training is concerned. It makes the Act a little tidier, easier to read and easier to implement, I believe.

If I may come back to clause 4, I should like to point out that it is also interesting to note that the Minister too is confined here. I think the hon. member for Bezuidenhout has also referred to this aspect. We welcome the fact that restrictions are being placed upon the hon. the Minister to compel him to comply with the provisions of the Act; in other words, he may not approve of an appointment outside of the provisions of the Act. We welcome this fact because we believe that it does impose certain restrictions in respect of such appointments. Clause 6 also deals with the question of health requirements in respect of those people on probation. It lays down certain conditions in regard to health that have to be met before an appointment can be made.

We have certain reservations in regard to clause 6(d) which provides for the deletion of the proviso to section 11(4) of the principal Act. This subsection deals with the question of the publication of appointments in the annual report. The subsection reads as follows—

1. (a) the transfer or promotion of an officer; or
2. (b) if the post cannot be satisfactorily filled by such transfer or promotion, the appointment of a person who is not an officer;

Now follow the proviso that is proposed to be deleted. It reads as follows—

• (i) the name of every person …;
• (ii) the post to which such person has been appointed;
• (iii) the salary scale attached to such a post; and
• (iv) the special qualifications of such person for the post and the special reasons for his appointment.

As I say, we are not altogether happy about the deletion of this proviso. We believe that it is not altogether necessary. We realize that while this only applies to the administrative division and not to the technical or professional divisions, we believe that further consideration should be given to this matter. I should just like to ask the hon. the Minister to give some thought to providing that details regarding the lower echelons need not be published, but that details regarding the higher echelons, for example, from Director upwards, should be published, so that hon. members in this House will know who have been appointed and the salaries at which they have been appointed. This is one point to which we should like the hon. the Minister to give some attention when he replies to the debate on the Second Reading because we may well move an amendment in this regard at the Committee Stage.

Clause 7 refers mainly to the probationary periods in respect of appointments, transfers and promotions and clarifies the position in this regard.

As far as clause 8 is concerned, I think it merely regularizes the position in regard to secondments as far as employees are concerned. Previously, it only referred to officers and now refers to employees as well. This is to be recommended.

With these few remarks and having raised the one reservation we have in regard to these provisions, we on this side of the House will be supporting this Bill.

Mr. Speaker, I should like to convey my sincere thanks to hon. members for their support of this Bill. To begin with I also wish to associate myself with the words of farewell conveyed by the hon. member for Gezina to the retiring chief spokesman of the official Opposition on this matter and to wish him everything of the best for the future.

To begin with I wish to refer to an important remark made by the hon. member for Innesdal. He expressed reservations about the fact that the determining of salary scales, too, cannot be either delegated or transferred. He also made a plea for greater flexibility in this regard to be granted to departments. While I have great appreciation for the eagerness of the hon. member for Innesdal to make a reality of greater managerial self-sufficiency in the departments, I do have serious reservations about diversifying the determining of salary scales by leaving it to various departments. Indeed, during the budget debate hon. members expressed concern about this very issue, viz. whether certain service benefits of the central Public Service were properly correlated with those of certain other Government bodies, for example. Accordingly, it is the Government’s practice increasingly to ask the Commission to advise it before granting approval to the determining of salary scales in other Government organizations such as the S.A. Transport Services, the Department of Posts and Telecommunications and so on. I should also like to point out that the Commission even finds it necessary, when working out and proposing new salary dispensations, to do so not merely in accordance with departments but to identify similar posts or, as the Commission calls them, post families, and to assess that post family throughout the Government service in all departments wherever it may occur. For example, the Minister of Health and Welfare recently announced that an improved dispensation for nurses would be phased in later this year. That dispensation applies to all nurses, irrespective of the Government department that employs them. When this matter is considered, due note must be taken of the kind of service or “work speciality” rendered by the profession in question in all departments and not only in one department. Although I understand the attitude underlying the remark by the hon. member for Innesdal, I do believe that the Commission and the Government must take great care to prevent undue competition and point-scoring—a process of robbing Peter to pay Paul—from developing within the Public Service as regards the determining of salaries.

†I should like to refer briefly to some of the points raised by the hon. member for Bezuidenhout. He has quite rightly mentioned that only a small percentage of posts will be affected by the transfer rather than delegation procedure which is going to be instituted. However, the important thing is that although quantitatively there will perhaps not be a tremendous increase in the percentage of posts dealt with, qualitatively, in terms of the importance of the posts, a very considerable increase will be introduced. I should like to mention that the reason why it is not considered advisable to raise this ceiling further is that at the top level, the real management level of the different departments, one should not consider only the claims of the employees of a single department but also consider the interchangeability of able management officials as they identify themselves in different departments so that one could switch them to and fro.

Are you referring to top management?

Yes, the top management. The hon. member also suggested that special care should be exerted to ensure that no abuses take place since it is no longer going to be a matter of delegation but of transfer of authority. I have stated in my initial speech that provision is made for inspection by the Commission and for the Commission to acquire reports from the departments concerned about the way in which they implement these new powers. With this transfer of powers the Commission can lay down in the proclamation certain conditions under which these powers should be executed. Together with the annual report of the Commission tabled in Parliament, it ensures that there will be ample control. The point is, however, taken that we are asking Parliament to give a greater management autonomy to departments and that this certainly requires a careful supervision of the way in which it is to be implemented.

The hon. member also asked, if I understood him correctly, whether the Commission for Administration considers itself to be a leader or a follower in respect of salary policy vis-à-vis the rest of the employers in the general economy. It would have been ideal if the Commission for Administration could have set the pace in terms of salary and conditions of employment.

They should.

The practical reality makes this rather difficult. However, I am still convinced that the overall package which is offered an employee in the Civil Service should be made up in such a way that not only in terms of money but also in terms of job satisfaction and fringe benefits it is competitive with the more risky employment in the private sector. I think one has to be realistic that the Public Service and the Commission for Administration cannot really be expected to be an overall pace-setter in this respect.

The hon. member for Bezuidenhout also made a very important point regarding the negotiating structure between the civil servants and the Commission for Administration as their employer. It is generally accepted that the Joint Council as presently constituted does not really provide in this need. I have also referred earlier, during the budget debate, to the decision taken by the Cabinet approving in principle that the present rather informal negotiating procedure between the representatives of the Public Servants’ Association and the Commission should be structured in a formal pattern, setting up formal negotiating bodies, defining the representation from the different negotiating bodies and also laying down the procedure to be followed in this respect. The Government has approved of this in principle and the Commission is in the process of working out the procedure in more detail. In this way bodies representing the public servants will be given formal representation; they will be formally consulted and their advice will have to be considered formally and be reported on back to the negotiating machinery.

But direct with the Minister?

The possibility of direct negotiation with the Minister is not envisaged at this stage, although, by way of courtesy, both my predecessor and I have made ourselves available in order to ease away certain difficulties, certain problems. However, we feel convinced that if there is a properly structured negotiating system, it will not be necessary to bring in the Minister as a matter of course into this negotiating machinery. It should also be borne in mind that the Minister, together with the Commission, really has an overall supervisory responsibility in this respect. He is not only concerned with public servants of the central Public Service, but also with other sectors, such as the teaching profession and the other organizations to which I have already referred, such as Posts and Telecommunications and the S.A. Transport Services. This matter to which the hon. member has referred is recognized to be an important one and I should like to give the assurance that it is receiving high priority. We hope that for the next round of negotiations such a formally structured negotiating machinery will already have been set up.

*Then, too, I should like to refer with appreciation to the very relevant and, I think, original contribution made in this regard by the hon. member for Koedoespoort, when he pointed out that because the Commission is now no longer going to be as directly involved in the appointment of staff, it will in fact bring far greater objectivity to bear in assessing the handling by departments of staff appointments and also in the assessment of appeals. I think that this is a valid point which underscores to an even greater extent the importance and merit of this matter.

I shall also give attention today to the hon. member’s suggestion that consideration be given to the need for the word “relative” in line 19 of page 9 of the Bill. It really goes without saying that when one prescribes that the merit, efficiency and suitability of the persons is to be taken into account, it must be their merit, efficiency and suitability in relation to other persons. It may therefore be possible to drop the word “relative”. However, we shall consider the matter.

Then I should like to express appreciation for the emphasis laid by the hon. member for Gezina on the important issue of training in the Public Service. It is true that in fact the Public Service carries out a major task of training, also for the national economy as a whole, at the expense of the central Government, and the Government is sometimes plundered of people that it had really trained for its own service. Personally, however, I have my doubts as to whether we shall get very far with penal clauses, because to compel a person that one has trained to remain in one’s service by means of a penal clause is not always conducive to job satisfaction. However, I want to give the hon. member for Gezina the assurance that we are attending to this matter and that this is something that we are indeed concerned about. Accordingly the matter will be under constant scrutiny.

†The hon. member for South Coast rightly referred to the fact that the Minister himself is also confined in respect of his authority in making appointments in terms of clause 4. I should like to emphasize that the Government lays very great value on the fact that the Public Service should be basically organized, appointed and taken care of by the independent statutory Commission for Administration rather than by the executive of the State, which has a much more strongly political bias. When it comes to the appointment of top-level administrators, of head of departments, the Government obviously also has an interest in the matter, and should therefore finalize the recommendations of the Commission.

I appreciate the suggestion made by the hon. member for South Coast in respect of the total abolition of reporting in the annual report on appointments from outside the Public Service. The fact is, however, that the Public Service is not a self-protecting organization. It is an organization with open doors, and as such likes to invite properly qualified candidates from outside to compete for appointment and to take up appointments. I should, however, like to give the assurance that, especially at the top level, no appointments from outside the Public Service are made or considered unless the vacancies have been publicly advertised to enable everybody to compete fairly and to ensure that there will be no improper benefitting of individuals who might have taken the fancy of the responsible head official. I am, however, willing to go into the matter again, and I hope that the hon. member for South Coast will be agreeable to my leaving this matter over for the time being. We will also consider whether continued reporting in the annual report on appointments made from outside in the higher level posts is not perhaps justified, although we feel that the present policy of open advertising and the fact that the Public Service displays a spirit of not really being afraid to compete in case of need for outside applicants, is a healthy sign and is in fact, moving away from what might sometimes appear to be an overly self-protecting attitude on the part of the organization.

I hope that I have dealt with all the matters raised, and again wish to express my appreciation of all the contributions made by hon. members.

Question agreed to.

Bill read a Second Time.

Bill not committed.

Bill read a Third Time.

Mr. Speaker, I move—

As is customary, copies of the draft Bill and the explanatory notes were made available to certain hon. members on both sides of the House even before the Bill was read a First Time, so as to enable them to study these documents. It has also been discussed with certain groups as well as with interested private bodies.

Hon. members will recall that since 1978, all amendments made to the schedules to the Customs and Excise Act, 1964, during the course of the year have been bound in book form every year and tabled in the House of Assembly together with explanatory notes in the form of a White Paper. Since then, all amendments announced by the hon. the Minister of Finance during a budget speech have, by reason of their nature, been published in the form of Government Notices in the Government Gazette, and bound together with the amendments to the schedules to which I have referred. This year there is one exception, however, and that is the surcharge imposed by the hon. the Minister by way of a taxation proposal which he tabled during the Second Reading of the Part Appropriation Bill on 11 February 1982. The amendments published in the Government Gazette since 7 August 1981 have been bound in book form and tabled, as in the past. The amendments tabled as a taxation proposal must, however, be incorporated as a schedule to the amending Bill. That is why there is a schedule to the amending Bill again this year.

Apart from the customary clause in connection with the continuation of amendments of the schedules to the legislation, and the clause dealing with the imposition of the surcharge, several amendments are being proposed, the most important of which are the amendments relating to the acceptance of the principles of chapter 7 of the General Agreement on Tariffs and Trade.

The proposed amendment of section 20(2)(a), as contained in clause 1 gives effect to a custom which is already being followed in practice, in the sense that the licensee of a customs and excise warehouse takes an accurate account of goods received in his warehouse and records the information. In addition to this obligation, it is also being made clear that subject to the allowances in terms of section 75(18), any excess shall be debited.

Clause 2 amends section 30(2) of the principal Act by substituting for the reference to the Wine and Spirits Control Act, No. 38 of 1956, which has been repealed, the reference to the Wine and Spirits Control Act, No. 47 of 1970.

Clause 3 amends section 34(4) of the principal Act by substituting for the reference to the Liquor Act, No. 30 of 1928, which has also been repealed, the reference to the Liquor Act, No. 84 of 1977.

The proposed amendment of section 40(3)(a) of the principal Act, as contained in clause 4, has largely been necessitated by the technical developments in the office of the Commissioner for Customs and Excise with regard to the processing of bills of entry. Customs and Excise has for some considerable time been investigating the countrywide computerization of the processing of bills of entry. This project has progressed to the point where some of the apparatus has already been installed in the office of the Controller of Customs and Excise, Cape Town, and is at present being tested. It is a major project which requires adjustments over a wide spectrum of the activities of Customs and Excise.

One of the most conspicuous adjustments has been the reduction of the types of bills of entry which can be prescribed by regulation to a few prescribed bills of entry which simply have purpose codes added to them to indicate the purpose for which the goods are being cleared.

To a large extent, the present provisions of section 40(3)(a) still refer to the situation as it was when separate bills of entry were prescribed for every purpose, in so far as it refers to the replacement of one type of bill of entry by another.

In spite of the process of computerization, the replacement of one bill of entry by another will still be necessary under certain circumstances—especially where the purpose code changes and the refund of duty becomes relevant. The amendment of the subsection is therefore being proposed to bring it into line with the altered circumstances.

Clause 5 relates to clauses 13 and 18 and will be dealt with together with those clauses.

In terms of section 38(1), an importer shall within 7 days of the date on which his goods are deemed to have been imported, or within such further time as the Commissioner may allow, make due entry of those goods. If this has not been done upon expiry of this period, the Commissioner may instruct the importer to make due entry of the goods within a specified time. If the importer still fails to make due entry of the goods, such goods are liable to forfeiture and can be seized and sold. Container operators, container depot operators and carriers naturally have a claim to the payment of charges and freight from the proceeds of the sale of the goods. However, there is no provision in the Customs and Excise Act at the moment in terms of which the Commissioner for Customs and Excise can make such payments from the proceeds of the sale of these goods that have been declared forfeited.

Clause 6 now provides for the insertion of section 43(2)(b), in terms of which container operators, container depot operators and carriers are enabled to submit claims for charges and freight in respect of the balance of the proceeds, i.e. after deduction of duty, expenses and charges, to the Commissioner.

In clause 7, provision is being made for the amendment of section 45(2) of the principal Act in order to lay down the time of entry of goods not imported by post. It is defined as the time when a draft bill of entry is delivered at a place indicated by the Controller of Customs and Excise. In this connection I should first explain, perhaps, that amendments to the scales of customs duty are announced in the Government Gazette almost every Friday. Now the situation may arise that an importer may deliver his draft bill of entry on, say, a Wednesday, and that the Directorate of Customs and Excise may refer it back to him as a result of some mistake that has been made. If the importer redelivers the corrected draft bill of entry on the Friday, it may happen that the duty on his goods has been increased on the Friday and he then has to pay the higher duty in spite of the fact that he originally delivered the draft bill of entry on the Wednesday. As progress is made with the process of computerization to which I have already referred, there will also be a marked increase in phenomenon, because more accounting errors will be discovered by the computer than are being discovered at the moment. The proposed amendment will enable the importer to correct a draft bill of entry which has been returned to him and to redeliver it within five days before the position I have just outlined can arise.

Clause 8 is a technical amendment and simply corrects section 47(6).

Hon. members will recall that I said at the beginning of my speech that the hon. the Minister of Finance normally proclaimed in the Government Gazette any tax amendments announced by him during a budget speech, because of the nature of such amendments. When the surcharge was imposed earlier this year, he was unable to do so, because the Customs and Excise Act does not provide for the insertion of Part 4 of Schedule No. 1 into the Act by way of a Government Notice. The same applies with respect to Part 2 and Part 3. Similarly, no provision is made for the withdrawal of these parts in this way. The proposed amendment, as contained in clause 9(a), rectifies this position.

Clause 9(b) arises from the amendment in clause 9(a) and the period after which any amendment made under section 48 shall lapse is being increased from 30 to 60 days, so as to provide for any reasonable eventuality which may delay the proclamation of legislation passed during any session of Parliament.

Many people are under the mistaken impression that the hon. the Minister of Finance can only table taxation proposals during his main budget speech. In clause 10 it is now being made quite clear that the Minister may table a taxation proposal at any time.

The proposed amendment of section 60(2), as contained in clause 11, appears at first sight to confer a wide discretion upon the Commissioner for Customs and Excise. However, an examination of the present provision will reveal that the Commissioner can refuse the renewal of any licence. Therefore his discretion is not limited. It is true that in terms of the proposed amendment, he is also being given the discretion to suspend any licence, but this discretion, and his discretion to refuse any application for a renewal of any licence or to cancel any licence, are limited, in terms of the proposed amendment, to certain specific matters relating to contraventions and offences on the part of the licensee. Seen in its entirety, the proposed amendment will be conducive to more effective administration, because the Commissioner will now be able to exercise clearly defined powers. I should like to point out, too, that any decision by the Commissioner in this connection is in any event subject to appeal to the Minister.

As far as clause 12 is concerned, I need not say very much, I suppose, and I have no doubt that this proposed amendment will be welcomed by all the hon. members. The effect of the proposed amendment is, briefly, that the licence of an agricultural distiller may be transferred from one licensee or from one farm to another, in circumstances which the Commissioner may deem exceptional, for example, in the event of the death of the licensee or the expropriation of the farm of a licensee, with the written permission of the Commissioner, and subject to such conditions as he may determine. This concession does not apply to applications for new licences. [Interjections.]

I thought there would be a strong reaction to this from the Transvalers, but now it appears that the Cape members are the only ones who are reacting. [Interjections.] I get the impression that “mampoer” will henceforth be distilled in the Cape as well. [Interjections.]

†Mr. Speaker, a very important matter which is being dealt with in this Bill is that of customs valuation. In view of its importance I would like to deal with this at length. Originally the purpose of imposing customs duties was usually to raise revenue. For ease of collection, customs duties were mainly specific duties, i.e. they were levied at a fixed rate per unit of quantity. After the First World War customs tariffs were recognized as useful instruments in the hands of governments, firstly for the protection of home industries, and secondly for the conclusion of trade agreements. For these purposes specific rates of duty were less suitable than duties based on a percentage of the value of the goods, i.e. ad valorem duties, which therefore became more important. For the purposes of levying ad valorem rates of duty on imported goods, it is necessary for Customs to appraise or value such goods in accordance with the principles and rules of the valuation system in force at the time. For many years South Africa used a system of valuation which was based on the so-called dual value concept of domestic value of the goods in the country of export or the free on board selling price to the importer in the Republic, whichever was the more beneficial to the Revenue. Administration of the system called for the verification of the domestic values declared by foreign exporters on invoices prescribed for this purpose. It also necessitated the stationing abroad of members of the Valuation Branch of the Customs Administration.

For various reasons, mainly resistance by importers to the requests for information and the change in the nature of imported goods, for example, from finished to semi-finished goods, administration of the system became progressively more difficult during the post World War II era. Furthermore, member States of the General Agreement on Tariffs and Trade (GATT) maintained that our system of valuation was not in conformity with GATT valuation principles as set out in Article VII of the agreement.

In 1974 an interdepartmental committee was appointed to examine the situation and to make recommendations. The committee recommended that the Republic’s valuation system should be based on the internationally recognized system known as the Brussels Definition of Value. The committee’s recommendation was accepted and on 1 January 1978 the Brussels Definition of Value was implemented. At the time this system formed the basis for the valuation laws of approximately 110 countries, including the Republic’s main trading partners. One of the agreements which emerged from the Tokyo round of the GATT Multilateral Trade negotiations in 1979 was a new international agreement on customs valuation titled the Agreement on Implementation of Article VII of GATT. This GATT agreement and valuation sets out precise, logical and straightforward rules which must be followed by customs authorities of all signatory countries when valuing imported goods.

South Africa has followed developments closely and after an intensive comparative study by the office of the Commissioner for Customs and Excise the hon. the Minister of Finance has decided to accept the new GATT agreement on customs valuation as it would be in South Africa’s interests to do so because—

1. (a) the positive “transaction value” concept of the agreement will be better understood by customs officers and importers alike than the notional concept of the current system;
2. (b) the precise rules laid down in the agreement will enable importers to determine the customs value of their goods with a greater degree of certainty than before;
3. (c) it is a fair, uniform and neutral system that precludes the use of arbitrary or fictitious customs values and is based on simple and equitable criteria consistent with commercial practice;
4. (d) the agreement is expected to enjoy much wider international acceptance than the present system ever did; and
5. (e) the view held by members of the Customs Co-operation Council is that the system presently in force in the Republic will be phased out in the not too distant future as more countries accept the new valuation agreement. Already in the period June 1980 to June 1981 approximately 21 Western countries, including the Republic’s main trading partners, accepted the GATT Agreement on Valuation as the basis for their valuation laws.

Clauses 5 and 13 to 18 give effect to the acceptance of the new valuation agreement or are consequential upon the acceptance thereof and in order to allow for a smooth change-over it is proposed that these clauses come into operation with effect from 1 July 1983. In the interim period Customs and Excise, in close co-operation with organizations representing commerce and industry such as Assocom, FCI and the Afrikaanse Handelsinstitute will be arranging for seminars to be held country-wide during which the new valuation system will be explained in detail. Furthermore, a guide regarding the new valuation system is presently being compiled and the Commissioner for Customs and Excise expects that this guide will be ready for distribution to organized commerce and industry not later than early 1983.

Mr. Speaker, the proposed amendments contained in clause 19 are improvements in that certain requirements relating to registration under rebate of customs duty are abolished and that the period within which a refund or drawback may be applied for under section 75(14) is extended from one to six months.

The proposed amendments contained in clause 20 have the effect that a person claiming a refund of duty on goods damaged, destroyed or irrecoverably lost through circumstances beyond his control need no longer satisfy the Commissioner for Customs and Excise that any compensation which he has received did not include the duty paid on the goods.

Clause 21 provides for a licensee to set off the countervailing customs duty payable in terms of part 2B of schedule No. 1 to the Customs and Excise Act under certain circumstances. This facility has been administratively allowed since 3 July 1978 and it is proposed that this clause be deemed to have come into operation on that date.

Clause 22 extends the provision of section 80(l)(j) in that it becomes an offence to receive any rebate, drawback, refund or payment to which a person knows he is not entitled.

Clause 23 deletes a provision which is no longer required.

Following representations from, amongst others, the S.A. Shipping and Forwarding Agents Association regarding the liability imposed on an agent for the acts of his principal, it has been decided to specify the circumstances in which an agent will be absolved from such liability. Clause 24 specifies these circumstances.

Clause 25 mainly deletes obsolete requirements.

Mr. Speaker, I should first of all like to indicate that, as far as we are concerned, we are very appreciative of the explanatory memorandum which was furnished to us. We are also appreciative of the explanations which were given to us and the meetings which were arranged. Some of the suggestions which we made to the original draft roneoed Bill have in fact been incorporated in the printed one, and I think this demonstrates how effective this method of consultation is. I also want to say that we are appreciative of the spirit of cooperation that always comes from the Commissioner of Customs and Excise and from members of his staff. We should like to place this on record right at the beginning of this debate. Secondly, I think the hon. the Deputy Minister will agree that these benches are a little empty at the moment. Just to make sure that they get filled again, perhaps I ought to give the hon. the Deputy Minister notice now that I intend moving an amendment on which we shall divide. I therefore move as an amendment—

1. (1) to take more active steps to reduce the burden on consumers as a result of the decline in the value of the rand against the currencies of the Republic’s major trading partners; and
2. (2) to exempt from the import levy those articles the imposition of the import levy on which would have an adverse effect on the living costs of ordinary South Africans.”.

We want to make it quite clear at the outset that any increases in the tariffs which we believe have the effect of increasing the living costs for the ordinary working South African cannot meet with our support. There are other methods of raising revenue and there are other methods of dealing with the same problem and therefore we do not believe that this is the correct method of doing so.

The ordinary South African, the working man in South Africa is bearing a burden of inflation, a burden where his living costs of essentials are going up daily, and we do not believe that the Government should make the situation worse for ordinary people in South Africa by imposing these burdens now. The position is difficult enough as it is.

The items to which the hon. the Deputy Minister has referred, both in regard to the import levy and some of the other duties, will be dealt with by some of my hon. colleagues, but it is quite clear that this cannot have our blessing and it cannot go without our objection.

It is furthermore quite obvious to anyone that the reduction in the value of the rand has benefited some people in South Africa and has been of disadvantage to others. Previously exporters were exporting when the value of the rand was $1,37 and now the value has dropped to 94 cents or even less. I do not know what the figure is for today or what the latest available figure is. When the rand had dropped to this extent there is no doubt that a redistribution of wealth has taken place or is taking place in South Africa. Exporters are benefiting from it and the consumers who have to use certain imported goods are the ones who are being disadvantaged. I would have imagined that the hon. Deputy Minister and the Government who are so concerned about the redistribution of wealth and about the fact that inflation is running at a rate which they are unable adequately to control, would not impose surcharges on goods which have the effect of increasing the living costs of ordinary people in South Africa. We find this remarkable. We find it remarkable that faced with this the Government sits back and allows this situation to take place. They say that as far as they are concerned the rand should run its ordinary course when in fact we all know that we have a managed float and not an automatic float. We all know that. We have statements on record made by the highest authority last year that the Government was at that time encouraging the rand to drop against the dollar. They were in fact encouraging it. Yet, despite that the consumer and the ordinary man have to bear this burden.

The third matter that I want to deal with falls into a slightly different category. I want to draw the attention of the hon. the Deputy Minister to what we think is an abuse and a racket which is taking place. This is in regard to the importation of second-hand motorcars into South Africa. Second-hand motorcars are being imported at very high prices. This practice is still being abused, despite certain action which has been taken, by means of the importation of these vehicles through countries which are members of the Customs Union to which South Africa belongs. In our view this practice should be put a stop to without delay. What makes it even worse is that not only is there a racket in respect of this kind of importation but it is now also becoming more and more apparent that many of these second-hand motorcars which are being imported into South Africa are motorcars which have been stolen in other parts of the world. These cars are brought into South Africa when in fact they are stolen property. There was a time when a man went overseas and bought a motorcar for himself to travel around for a few months when he was allowed to bring that motorcar back with him to South Africa without paying any undue duty on it. Now that has all been changed. I would much rather see that the ordinary person who goes overseas, buys himself a motorcar and travels around, should be allowed to bring the car back to South Africa instead of some of these racketeers who import these cars into South Africa. I do not say that everybody who buys an imported second-hand car in South Africa knows that the car has been stolen. I am not saying that for one moment. However, the reality is that there are racketeers overseas who are abusing this situation and are in fact foisting stolen property onto people in South Africa who buy it quite innocently. I want to tell the hon. the Deputy Minister that something needs to be done very drastically in this regard. As far as I can see the best way to do it is to talk to our partners in the Customs Union. Until a method is found to stop this practice a blanket ban should be imposed on the importation of second-hand motorcars for the purpose of resale. If a person wants to import a second-hand car for his own use, that is another matter. However, for the purpose of resale, I believe, there should be a blanket ban.

The fourth matter that I want to deal with is perhaps the most important aspect of this Bill, namely the question of bringing us into the whole international customs community in regard to the question of customs evaluation. We support this proposal and it meets with our approval for a whole series of reasons. I do not need to enlarge upon them all. I think there are very real advantages to us in following this particular course. May I, however, just highlight a few matters in relation to it?

Firstly, we note in clause 7 that there is an appeal to the Supreme Court where there is a dispute in regard to the valuation. That principle of the appeal to the courts is one that we welcome; it is just a pity that it does not exist in other places. In fact, if I have the time and the opportunity I intend moving an amendment to one of the other clauses also to make provision for an appeal to the Supreme Court because access to the courts is something which we regard as being important. Whereas we welcome this provision in subsection (6) of the proposed new section 65 it is absent in the amendment proposed by clause 24. Perhaps we can be told why it is present in the one provision and absent in the other. We believe that it should be in both of them.

Secondly, when one looks at the proposed subsection (8)(a) on page 13 one still has some difficulty in appreciating why the value for customs duty should be the transaction value plus 15%. Despite discussions which I had with the Commissioner on this matter I am still not really satisfied. Therefore we should like to ask the hon. the Deputy Minister to tell us why 15% must be added. If anything has to be added, why is it 15%? Why is it not 10%? Why is it not 20%? Why is it not 5%? It seems to us to be a completely arbitrary figure and, on the face of it, it appears to us to be too high.

The other matter with which we have some problems is the question of the relationship between people as set out in clause 14 of the Bill. In particular, when one looks at the proposed new subsection (2)(a) one sees that it deals with the question as to when a seller and a buyer are deemed to be related. I have a number of problems with regard to this subsection. Firstly, paragraph (iv) of subsection 2(a) states—

I do not believe that somebody who is a minority shareholder, who owns 5% of a company and who is not represented on the board of that company has any say in regard to the affairs of that company at all. To suggest that they are related is, with great respect, not correct. I should therefore like to suggest to the hon. the Deputy Minister that if that person who holds 5% of the share capital is either a director of the company or is entitled by means of an agreement with the other shareholders to be represented on the board, then in fact he does have some say in the matter and it can be said that that company would be related to another. However, the mere holding of 5% of the equity shares of a company certainly does not create that situation.

Then I should like the hon. the Deputy Minister to look at subsection (2)(a)(i). I have a problem with that because subsection (2)(a) states—

• (i) they are officers or directors of one another’s businesses.

Let me take the example of two companies. How can two companies be deemed to be related in terms of this provision when they cannot be officers or directors of each other because companies cannot be officers or directors? The reality of the matter as I understand it—and I think this is what the hon. the Deputy Minister is really driving at—is that if officers or directors of one company are also the officers and directors of another company, then in fact a relationship exists. I wonder whether the hon. the Deputy Minister will not consider the substitution in paragraph (i) of the words “officers or directors of the one company are also officers and directors of the other”. It does appear to us that that would be more appropriate in regard to the intention that is really being aimed at. The same applies with regard to the 5% shareholding. One could perhaps add at the end “or such person is a director or is represented on the board of directors of both companies”. The one will, in fact, have a clear situation.

I also believe that one is going to have vagueness in regard to what is meant under paragraph (viii) with regard to the meaning of “family”. Is a cousin a member of a family? Is a second cousin a member of a family? [Interjections.] The hon. member for Langlaagte appears to have much knowledge of the religions and languages of other people, and for this I am grateful. To me the term “family” is vague. In a broad sense one knows what one’s family is but as far as a legal definition is concerned I think we are heading for some problems in that regard.

Just die and you will find out who your family is.

The problem is, however, that the Commissioner for Customs and Excise never dies; he fives forever, so that will not arise. [Interjections.] The other problem is that one never inherits anything from the Commissioner of Customs and Excise; one only pays him. [Interjections.] I do not think therefore that that analogy of the hon. member for Malmesbury will get him out of his dilemma.

Referring to the same issue, I should also like to ask the hon. the Deputy Minister to turn to page 27 and to look at the proposed section 74A. We have a problem with this section, because subsection (1) reads—

That, in my view, is very clear. In other words, if one is going to interpret sections 65, 66 and 67, one has actually to interpret them subject to these agreements. If the agreements differ, then one would apply the agreements. However, subsection (3) reads—

In other words, one does not need subsection (1) at all if subsection (3) applies because it says that one must in any case interpret it in that way. The question therefore is whether it is really the intention that these agreements, tariffs and opinions should prevail or that the wording of the legislation should prevail because, if the opinions and the notes should prevail then subsection (3) should be deleted. If, on the other hand, the legislation should prevail, then one should not have subsection (1) at all and subsection(3) can be retained if one so wishes. With great respect, Sir, there appears to be some conflict in relation to that matter.

I now wish to turn to clause 11 on page 9. Here I want to ask the hon. the Deputy Minister a question that arises from the issue as to why the Supreme Court is included in some provisions and not in others because here the refusal of an application for a licence is only subject to appeal to the Minister. I must therefore ask the hon. the Deputy Minister why there is not a further appeal to the court as there is in the case of a dispute in respect of value. I also wish to draw attention to the way in which paragraphs (a) and (b) of the proposed new section 60(2) have been drafted, because unless one telescopes those two paragraphs into one, it looks as if the provisions at the end of paragraph (b) which really apply to both (a) and (b) apply only to paragraph (b); in other words to my mind the concluding three conditions should apply to both paragraphs (a) and (b) and not to paragraph (b) only. We think that that also requires alteration.

I should also like to refer to clause 20 which deals with a matter that I have dealt with repeatedly in this House. I am referring to the fact that I do not accept that one should impose a duty on goods that are stolen. The argument is that those goods are circulated for consumption, but it is the man from whom the goods are stolen who not only has to suffer the loss of the theft but, to add insult to injury, has to pay duty on the goods that have been stolen from him. To me that is not in accordance with any past reasonable practice. It is certainly not a practice we can support.

I then want to refer to clause 24. If one were to go back and refer to past debates, one would see that this is part of the relief that we asked for when this provision was originally introduced into the Act, and to that extent we welcome it. Again, however, the words “proves to the satisfaction of the Commissioner” are used. Why should there not be an appeal to the courts, however, as there is in the case of the value provision? We therefore ask that that be considered again, because an appeal to the courts should be allowed.

I then want to go back to clause 9 which amends section 48 of the principal Act to enable certain powers to be given to the hon. the Minister. We do not, however, like these powers to be given to the hon. the Minister. In fact, with the constitutional changes that are in the offing, the question of the powers of the executive needs to be far more carefully looked at than ever before, because even though nobody has yet said whether the Government accepts or does not accept the recommendations of the President’s Council, and we therefore do not really know what the situation is, the reality of the matter is that the recommendations of that council are that there should be a clear separation between the executive and the legislature. Therefore if the legislature now relinquishes taxation powers to the executive, it may never be possible to get those powers back again. If one is going to have an executive president who himself appoints a Cabinet of people who, when they become Ministers of that Cabinet, can no longer sit in this House, the only powers that this House will have—or whatever legislature there may be—will be the power to control expenditure, the power to vote money or withhold money. So if we now give these powers to the executive, removing them from the ambit of this legislature, we would be taking away from the legislature one of the major powers that it has. What would then happen would be that the executive would not only be in the position of being able to decide to run the country without the legislature, only coming into Parliament to have new laws passed, but of having certain taxation powers that could be exercised without our being able to control them. That is consequently something that now needs to be looked at far more carefully than it has ever been looked at before, because going right back to the old days of the English Parliament, the days of Cromwell and even before him, the power that the legislature has always had is that of either granting or withholding funds. That is the power that we jealously guard. It is not a power that we should part with in any shape or form whatsoever.

I have raised a number of points, some of them concerning matters of detail and some concerning broad issues. I have tried to indicate that we do not want loopholes in the law that can be abused. I have tried to indicate what the lot of the ordinary man would be as a result of these duties, and I have also tried to indicate what the legislature’s powers and functions should be.

In those circumstances, even though there are many things in this Bill that we support and welcome, I have had to move my amendment. We ask the Government to give us the two undertakings before we will vote for this particular measure.

Mr. Speaker, we have once again had typical Prog politics this afternoon in that they support the principle of the Bill, but move an amendment which is aimed at political consumption and plays on the feelings of the man in the street. This is typical Prog politics and propaganda. I should like to ask the hon. member for Yeoville whether he has considered what influence the levying of a surcharge has had on consumer articles. I am not referring to capital goods, but goods intended for the consumer. It is ridiculous to argue that this surcharge will have a dramatic influence on consumer expenditure in South Africa. I shall refer to this again in the course of my speech.

It is very clear that customs and excise duty is still a means of indirect levying of tax which is of great value to the Treasury. It is a method of increasing State revenue in a way which, although it does not necessarily affect all consumers and taxpayers, does influence the taxpayers in the country on a broad basis. Therefore we are dealing here with an indirect method of supplementing State revenue which if judiciously implemented, can have a sound influence on the general economic climate in the country. This influence was again discernible with regard to the levying of the surcharge on imported goods. Apart from the monetary influence of this tax on the trade balance, it also has an important fiscal influence. This is what the hon. member for Yeoville and the official Opposition overlook. The fact is that the Government will have to find other sources from which to obtain the additional R550 million for the Treasury if we do not utilize this resource. If we had not utilized this resource there may have been only two alternatives, viz. to increase direct income tax considerably or to increase general sales tax by a further 1%, for example. The question is whether the hon. member for Yeoville would have accepted these measures which would then necessarily have had to be implemented. If I am not mistaken, he has already fought tooth and nail against the increase of 1% in GST. A further increase of 1% in GST would probably not have been accepted so easily, for instance, it would imply an increase of 50%. The increase in income tax would in turn have meant that only a small percentage of the population would be taxed.

The levying of a surcharge also acts as a brake on our trade balance. I contend that the present financial climate as far as our internal financial position is concerned, is one of approaching winter. The autumn in our economy has already reached an advanced stage, and the piercing cold of a sluggish and dreary financial situation is already being felt. We shall therefore have to cast an eagle eye over our expenditure pattern with regard to foreign purchases. For the next few years uncontrolled imports will be a luxury in our national economy which we shall not be able to afford without due consideration.

I want to conclude by just referring briefly to clause 14, a clause whereby a new component is being introduced into our customs legislation, namely, the so-called transaction value of imported goods. This is the price which is actually payable for goods when sold for export to the Republic and, of course, subject to certain rules as set out in the clause in question. As soon as the majority of countries have accepted the GATT codes of values, this will facilitate the international comparison of import and export figures considerably because the majority of our trading partners have already accepted this concept and apply this value system. In the increasing complex field of international commerce it is necessary that reliable international statistics should be available to determine the precise value of our trade structure. This can also mean that a greater degree of certainty and correctness may be effected with regard to the clearance of goods. This must of course eliminate unnecessary uncertainty. Accordingly I believe it is imperative that we should introduce this measure, which has now been internationally accepted and is used internationally, into our customs set-up and put it into operation. Accordingly we, too, take pleasure in supporting the Bill under discussion.

Mr. Speaker, I always find it interesting to listen to the hon. member for Yeoville when he discusses finance. This is because in the first place he knows his subject, and in the second place he uses stratagems—I mean this in the favourable sense of the word—in regard to every piece of legislation and takes from them what he regards as supporting his argument.

Looking at the weakening of the rand as against the dollar, it seems true that we are experiencing certain difficulties with our import trade. However, if the hon. member for Yeoville—and I believe that he would like to do so—wants to do the consumer a favour, he and I ought to agree today that our imports ought to be drastically reduced.

They have to be.

We shall have to reduce them drastically because our resources in foreign currency at the moment are not such as to enable us to afford those imports, and also, of course, because we import goods that we do not always need. In this regard I should like to focus on a problem that I have seen developing in recent times. It concerns large companies in particular. I should not like to mention companies by name because I believe that would be wrong. In this regard I have in mind, for example, large enterprises in the footwear industry, enterprises that take over from 10 to as many as 30 large chain-stores dealing in footwear. They then obtain import permits for the importation of as much as 30 to 40% of their supplies. As soon as those goods are put up for sale in the chain-store in question, a certain percentage is levied on the price of each article in order to cover the trader’s extra expenses. I believe it is time for us to realize that it is necessary to put a stop to this uncontrolled importation. We shall certainly have to curtail our imports.

Another major problem is, of course, the importation of second-hand motor-cars. This has really become an evil, and therefore one can only support steps to control this sort of thing. In our own country we have also experienced a major problem with regard to the exportation of heavy machinery, particularly during the cooling-off phase of our economy. Hon. members would be amazed to see what machinery has left the country. It is unbelievable how many millions of rands in value has left the country in this way. All this has occurred by way of the exportation of heavy machinery which, of course, finds its way back to South Africa after a year or two, newly painted and overhauled, of course.

In the Bill under discussion there is one clause that certainly deserves attention. It is clause 10. It is true of any form of taxation that one really should know when it is going to strike one. In every country people are prepared for that. I think that over the years South Africa has acquired the reputation that its Minister of Finance follows a certain pattern. Its Minister of Finance has a kind of instinct telling him how he ought to deal with his budget from year to year. Therefore we in South Africa never have a shock effect when it comes to the budget of the Minister of Finance, not, at least, over the past 10 years.

However, something I do not like is that a tax can simply be imposed by way of announcement. Nevertheless, I agree that as far as customs and excise are concerned, it may be necessary for it to be done in this way. However, I wish to ask that we avoid this as far as possible. In the normal course of affairs there is nothing more detrimental to a country than when a levy, of whatever nature, is imposed on share or any other transactions, particularly as far as the foreign investor is concerned, if the country has any problem as far as the risk factor is concerned. Whether justified or not, the fact is that we are today still regarded as a country to which certain risks are attached.

I now turn to the question of licensing, to which reference is made in clause 12. I think that mention is made in this clause of the holder of a license for a distillery on a farm. This is something which has been of considerable value to such a farmer over the years. It is not the distilling or sale of liquor which is something new in this case. What we are dealing with here is an old tradition which has been passed on over the years from father to son or from grandfather to grandchild. I think this is something which ought to be perpetuated in our history, so that people can see how decent liquor can be distilled from something like peaches. It is not a question of drunkenness, but of the knowledge required for that kind of distilling. I can remember visiting an old farmer whose technique of distilling peaches was such that if a drop of the liquor fell on a glass surface, that drop would roll. The properties of the drop corresponded to a large extent to those of mercury. One could really see that that old farmer was a craftsman and that he and his family have had to work for many years to perfect the technique.

We also welcome the fact that licenses may be granted to museums in this regard. I believe it is necessary that attention be given to such museums so that when one visits them one can see that we have a country which has preserved its cultural assets over the years. In such a museum one must also realize afresh that we have links with the French and other countries where the wine culture originated. In Transvaal, too, we have the benefit of being able to make a peach brandy which cannot be equalled anywhere in the world. [Interjections.]

I am always opposed to the misuse of anything. I heard an hon. member ask me whether we should be able to enjoy it on aircraft as well; he knows what my standpoint is. I believe that one should work even when one is sitting in an aircraft. That is one place that one cannot play football, and therefore one has to work while one is sitting there too. I think it would be better if one worked there or read something instead of having a drink.

What is important is that there are already museums of this nature at Worcester and Cullinan. We ask that attention be given to this so that people who visit our country visit these museums as well to learn more about our history.

I believe another important point relates to the rights of the Minister as provided in clause 9. In the new constitutional system, if there were to be a division between the Minister on the one hand and the legislative authority on the other, then one would have to give very careful consideration to the rights ceded to the Minister. The ordinary member of the House of Assembly is responsible to the people, but it would not be so easy to exert pressure on a Minister. Therefore one agrees wholeheartedly that this matter should be approached from an entirely different viewpoint today as regards the rights allocated to a Minister. Formerly one had confidence in the rights of Ministers, in the sense that matters could be left in their hands because they were here and could be called to account. One could challenge a Minister in his constituency if he did not understand what was at issue, or if he was obstinate about the matter. Therefore one should give careful consideration to this matter.

In general, I want to say that I think the department handles these matters well. Anyone who deals with them is impressed by the thoroughness with which the Commissioner and his officials perform their duties. In 1974 an interdepartmental committee was appointed. There is also the question of the GATT agreements entered into over the years which we were unable to fit in with without difficulty. However, these matters were dealt with very expertly, and now that everything has been brought into line internationally, we link up with it without difficulty.

We on this side of the House take pleasure in supporting this legislation, and we should like to convey our sincere thanks to the Commissioner and all his officials for the good work that they are doing.

Mr. Speaker, I do not wish to reply immediately to the points raised by the hon. member for Langlaagte although I shall probably refer to some of his remarks a little later on. As things stand at the moment, I have the Bill before me and I also have the amendment moved by the hon. member for Yeoville and I should like to deal firstly with the Bill.

I want to say at the outset that it is quite a straightforward Bill because, as the hon. the Deputy Minister has told us in great detail, a great deal of up-dating has been taking place and certain provisions of the legislation are also being amended in order to accommodate what is actually happening in practice. As hon. members have already mentioned, it also includes the up-dating of our legislation in the light of the Republic’s agreements in respect of GATT. The one fact I was very pleased to note was that the hon. the Deputy Minister said that seminars would be held for Assocom, the Afrikaanse Handelsinstitute, the FCI and others so that there will be no misunderstanding on the part of those people who are going to be directly involved as far as these provisions are concerned when it comes to applying them in practice. Therefore, as far as this aspect is concerned, we on these benches are inclined to go along with many of the provisions that are contained in this Bill.

As was said by the hon. member for Langlaagte, no doubt clause 12 is going to be welcomed most heartily by those members in whose constituencies there are those farmers who are at the present time distilling various kinds of spirits. I was just wondering whether these provisions would not possibly include some of the farmers in my constituency who may now be able to use sugar cane as a base in making a new kind of home brew. I know that as far as the Black community is concerned, many of them have already become most skilled at producing certain types of alcohol and I was wondering whether or not at some time in the future these could also fall under some provision which would exempt them from certain restrictions.

I want to make one or two comments about the Schedules which accompanied the explanatory memorandum and which laid down the new tariffs and duties on certain items. One thing I did note was that some fairly hefty duties are now being applied on certain vehicles, certain tractors and equipment. This would appear to me to be in order to protect the Atlantis diesel engine project. I also notice that there are other provisions which provide for rebates on certain imported tractors, chassis and so on, provided the imported goods or vehicles use the South African manufactured engine. I fully realize, and we on these benches fully appreciate, that customs and excise duties can be used to encourage local manufacture of certain goods. I doubt whether there is a single hon. member in the House who is not in agreement with the fact that South Africa will benefit from this, certainly in the long-term, when one considers the position South Africa finds itself in at present where in the international sphere undesirable practices such as sanctions can be applied to South Africa. In such circumstances the South African diesel engine becomes even more important. We agree that there is a great need to manufacture diesel engines in South Africa and we go along with that fully.

However, I wonder whether the hon. the Deputy Minister can give hon. members some idea of what this is going to cost the agricultural community in terms of increases in the price of tractors. We know there have been considerable increases in the prices of diesel tractors in recent years and the excuse has been given—we accept there has been a fairly high inflation rate throughout the country as a whole but some of the increases have been quite phenomenal—that it was because of the fact that the Atlantic diesel engine had to be fitted to these tractors. I would appreciate the hon. the Deputy Minister’s commenting on that.

I have also found in the Schedules that an exemption has been granted in respect of certain vehicles which are adapted for the physically handicapped. I was pleased to note that. The thought occurred to me in the light of the hon. member for Yeoville’s amendment that if we could make certain exemptions in respect of certain sections of the community, one could possibly consider favourably the second leg of his amendment in which he asks for the exemption from import duty of those articles “the imposition of the import levy on which would have an adverse effect on the living costs of ordinary South Africans”.

I also want to refer to another item which I noticed in the Schedule, namely the duty which has to be paid on goods brought into South Africa as baggage. I see the duty free amount has now been increased from R100 to R200. I have often wondered when I have returned from overseas and seen people on the aircraft making out their customs forms whether this amount is not a niggardly amount. I believe at one stage the amount was R80 and it is now being increased from R100 to R200. I have often wondered just how much revenue is collected in this way and whether it is worth all the hassle and additional expense.

Make it R1 000.

My hon. colleague says it should be increased to R1 000, but I will leave it to the hon. the Deputy Minister to think about this. Maybe he would like to comment on it.

Before I refer to the hon. member for Yeoville’s amendment, I want to say that I notice that in clause 26 we are being asked to confirm the provisions of previous amendments which have applied duties to certain goods. I should like to ask the hon. the Deputy Minister a question: How often does he re-examine those import duties which have been applied in the past? One appreciates that from time to time some companies make representations to the department and to the hon. the Minister asking for certain duties to be levied in order to protect local industries. We are all in favour of industrial development in South Africa and we are all in favour of a certain degree or protection of our own labour force. Therefore, we can concede the point that, from time to time, such duties are required. However, the question I want to put to the hon. the Deputy Minister is: How often are these reviewed? I ask this because it is quite possible that, within a year or two, circumstances will have changed and possibly the local manufacturers will not require that sort of protection that they have had in the past. Maybe the protection should then be withdrawn. Therefore, I ask whether there is a review system which reviews this matter frequently enough so as to ensure that these firms are not getting protection that they do not really deserve.

Mr. Speaker, if I may come now to the amendment of the hon. member for Yeoville, I want to say that hon. members on this side of the House will be supporting his amendment. When one looks at this amendment, one finds that there is every reason to support him on this amendment. What is the amendment actually asking this hon. House to do? I believe that it is firstly asking this House to cause the Government to take a very close look at a very serious problem in South Africa, namely the devaluation of the rand, relative to other currencies, which is imposing additional costs upon the ordinary consumer in this country. We know that during the latest year for which figures are available, the inflation rate was running on an annual basis at about 15½%. When one realizes that in other countries there has been a large measure of success with efforts to bring the inflation rate down by applying high interest rates and taking other steps—the United States is now way down to 6% or 7% and they hope that the inflation rate in the United Kingdom will shortly be coming down to below 10%—one wonders why it is that we in South Africa have still not been able to reduce our inflation rate to a more reasonable figure. Therefore, I think that the amendment of the hon. member for Yeoville causes one to take another close look at those factors which could be contributing to our high inflation rate. One reason is certainly the devaluation of the rand relative to other currencies.

As far as the second part of his amendment is concerned which is, as I have already mentioned, to exempt certain articles from the impart levy the imposition of which will at the present time have an adverse effect on living costs, I believe that many local manufacturers in South Africa today are being protected against competition at the expense of the consumer. I believe that we need to have a very close look at this. I believe that the amendment moved by the hon. member for Yeoville seeks to ask the Government to take a close look at this problem. Therefore, I believe that it is only right that it should be supported.

We know that a lot of the problems which the economy has had to cope with in recent times have been due to excessive consumption expenditure, especially with imported goods, as a result of the government allowing the money supply to get out of control, and that this has placed South Africa in the undesirable economic position that we are experiencing at present.

It is for these reasons, that we will be supply the hon. member for Yeoville’s amendment, despite the fact as I said earlier on, most of the provisions contained in this Bill are acceptable to us.

Mr. Speaker, before coming to the point I should like to discuss, viz. clause 12, I should just like to refer to the reservations expressed by the hon. member for Langlaagte about clause 10. Personally, I believe that this method whereby the hon. the Minister can put forward tax proposals during a Parliamentary session, is surely a far more modern and streamlined method of facilitating matters. The hon. member also referred to clause 12 and I want to thank him for his sentiments because they are in fine with mine. I do just want to say to the hon. member that what they distil in Transvaal is called mampoer, whereas I should also like to discuss witblits. The hon. the Deputy Minister will undoubtedly deal with the argument advanced by the hon. member for Amanzimtoti, but I do just want to say to him that sugar cane, too, has in the past been used for distilling. All that is left now is bananas.

The hon. the Deputy Minister asked why there were so few “Hear, hears” for clause 12. Accordingly, I, for my part, want to say “Hear, hear” about clause 12. It concerns the so-called agricultural distillers’ licences. That is a terribly long name. We simply talk about “boerestokery”. In this kind of distilling there is the legal and the illegal. I want to confine myself to the legal distillers. Throughout the country there are only 81 licensed distillers still living. Of these 31 distil wine. In the Cape winelands there are only 20 of these distillers’ licences left. Thirty-one of these licences are not even used any more. Then there are 19 legal distillers who distil the kind of wine to which the hon. member for Langlaagte referred. What goes into it I do not know, but it must be anything from prickly pears and figs and rotten peaches and that kind of thing. That is “mampoer”. Formerly this kind of distilling was very common, but the final result of that distilling, as far as quality is concerned, was not always of the best. However, I can give hon. members the assurance that it had a terrific kick.

Over the years, however, the distillers became centralized and also became more modern and sophisticated, with the result that eventually these farm distilleries began to die out. As these things happen, as many of these old-fashioned farming activities, which in some cases we have only heard and read about, and each of which is a piece of our cultural heritage—these distilling licences, too, that evoke a picture of men standing at a large distilling kettle in the bushes—have become part of our heritage and also part of our cultural history. Until today the Act has provided that such a licence is not transferable. This means that when the licence-holder dies, the licence dies with him. The existing licence-holders are all relatively old, with the result that within the foreseeable future we shall no longer have any of these people who are authorized to distil—with the emphasis on “authorized”. Nowadays these beautiful copper kettles are everywhere. Some people put them on their verandahs to show off; others are placed in sitting-rooms and several are in museums. Then, as the hon. member for Langlaagte said, there are a few that are used for demonstration purposes, e.g. at Worcester in the Kleinplasie agricultural museum. The subject of this type of distilling is one that can never be exhausted. It is a piece of culture about which there are many stories. The illegal stills have provided us with some fine stories. On one occasion Andre Brink said—

This witblits is as clear as water, and that is just where the trouble lies. I myself have had experience of this. You are served a stiff three fingers, and then the glass beaker with water is pushed in your direction, and you add some of its contents. You say “Gezundheit”. Everyone says “gezundheit”, and then one knows that one’s drink is a little strong. One takes a small sip and close one’s eyes. And that is one’s salvation, Sir, because when one closes your eyes, it prevents them from rolling over completely! [Interjections.] Then one asks for a little more water, and one is given that self-same glass beaker full of water, and one fills one’s glass to the brim. And all the time it is not water in that beaker; it, too, is witblits! [Interjections.] And it is here, Sir, that one separates the man from the boys. It depends how one swallows the witblits. For example, one must not gasp for breath, because if one does that, one is offered a glass of water, but it is not water. [Interjections.] Mr. Speaker, you will probably excuse me if at this stage I bring down the curtain, because the next scene takes place on the floor.

I had rather say nothing about “mampoer” and such things, because I do not know from what they are distilled, but I do want to tell you, Sir, that when the men sit around a table with a bottle of witblits, it is not long before the conversation turn to prophecy. It is then that politics becomes crystal-clear to one, and while one is about it, one chooses the right Springbok team as well.

But back to the genuine article, namely the licensed distiller of brandy, the man who participates in this fine tradition of ours. We cannot exaggerate this because the demand is not so great, and I do not think the department need concern itself about excise losses. The little that makes its way around illegally is surely not an issue, and we should rather forget about it, because I know a few hon. members who also like this kind of liquor. However, I wish to take it upon myself, on behalf of the entire industry, indeed, on behalf of our culture-lovers and all the men of the Boland, everyone who distils, to convey my sincere thanks to the hon. the Minister and the department for being able to preserve this piece of cultural heritage.

Mr. Speaker, I was wondering when we were going to start talking about mampoer in the discussion on this Bill, and finally the hon. member for Wellington has obliged. It leads me to the conclusion that there are in fact two things that make the NP really excited: “Die een is stokery en die ander is opstokery”. [Interjections.] However, I believe that this mampoer is such fiery stuff that perhaps those who in fact make it should be applying to the hon. the Minister of Mineral and Energy Affairs for a special incentive in terms of the fuel laws of this country, because I am quite certain that it can be put into any vehicle in its undiluted form.

I should like to thank the hon. member for Amanzimtoti for his support of the amendment moved by my hon. colleague. We are glad that his party will be supporting us in regard to this amendment. I should like to see that happen more often.

When you talk sense, yes, but when you are as stupid as you normally are you can forget it. [Interjections.]

The hon. member for Durban Point has made his usual extremely interesting and intelligent comment in a debate, and he adorns the front bench with great élan.

When we discuss the Bill that is in front of us today, it must of course be realized that it deals predominantly with various arrangements that have been made in terms of customs valuation and duty for customs purposes in terms of GATT’s regulations. My hon. colleague dealt with that in quite some detail, and I shall therefore not react to it any further.

There is however, one clause that gives me a certain amount of difficulty. I refer the hon. the Deputy Minister to clause 11 on pages 9 and 11 of the Bill. This clause reads as follows—

1. (a) refuse any application for a new licence; or
2. (b) refuse any application for a renewal of any licence or cancel or suspend for a specified period any licence if the applicant or holder of such licence, as the case may be—…

Then we have three clarifying provisions, (i), (ii) and (iii). From a reading of the Bill, it would appear that those three provisions only apply to the proposed new section 60(b) and not (a). I am not, however, altogether sure that this is the intention of this particular measure, because if what I suggest is happening, does happen, the Commissioner may refuse an application for a new licence—full stop. He does not necessarily have to have any reason for refusing that licence. If one reads the existing legislation, one sees that quite clearly the various qualifying provisions apply to both the refusal of an application and the renewal of a licence. I should like the hon. the Deputy Minister to make it quite clear in his reply to the Second Reading debate that the three qualifying provisions apply to the proposed section 60(2)(a) and (b) and that the Commissioner may refuse an application for a licence if the person concerned “has contravened or failed to comply with the provisions of this Act”. I look forward to hearing the hon. the Minister’s reply to that.

The main subject I want to talk about, in regard to this Bill, is the effect that the 10% surcharge is going to have on inflation in South Africa. The hon. member for Gezina did not seem to think it would have very much effect, but to start off with the hon. the Deputy Minister of Finance, in announcing this measure, suggested that something like R550 million would be gathered by means of this import surcharge of 10%. That is, of course, a tremendous amount of money. I would venture to suggest, however, that it will be considerably more than that, because if one adds the effect of the devaluation of the rand to the 10% surcharge, one finds that the value in rands of the imported article is going to be very much more than it would otherwise have been. To that increased figure the 10% surcharge is then added. I want to submit that the effect of this particular surcharge is going to prove very onerous indeed to the buying public of South Africa, more particularly in regard to those items that are imported from the United States of America where, of course, the dollar value as opposed to the rand value has increased considerably, in fact in excess of 30%. This means that the imported value of dollar articles would be increased by some 30% to start off with because of the devaluation of the rand. On that increased figure there will then also be the imposition of a levy of 10%. So overall I would be most surprized if this 10% surcharge does not put something like R700 million into the coffers of the Government in the course of a year. One only has to consider what this is going to do to inflation. We are, of course, all aware of the recent announcement that inflation has almost reached the highest ever level in South Africa. It was announced about a week to 10 days ago that the inflation rate was now in excess of 16%. One only has to look at all the items that have gone up since we had the general election to realize how right the hon. member for Yeoville was when he said it was a “vote now, pay later” election, because everything is going up. The cost of railage has gone up, post office tariffs have gone up, the price of mealies has gone up. Everywhere one looks one sees prices going up. The price of fertilizer is going up, the price of bread is going up, and so it goes on.

Then, looking in particular at the Bill before us, one begins to understand why the price of everything is rising at such a rate. I want to refer to the schedule starting on page 35 of the Bill. If one looks at the items on which the surcharge 10% is to be levied, one sees that it is quite frightening, because amongst the various items one finds that a large number of important articles are affected. Under the very first tariff heading, “Live Animals; Animal Products”, one finds that meat and edible meat offals; fish, crustaceans and molluscs, with certain exceptions; and dairy produce, natural honey and edible products of animal origin, again with certain exceptions are all hit by this levy of 10%. Vegetable products are to be hit, including edible vegetables and certain roots and tubers; edible fruit and nuts; coffee and tea; cereals; and oil seeds. All these items are being affected, although, as I have said, there are certain exceptions under the various items. There are, however, the headings of the items that are affected. Then on page 37, surcharge item 164, we have the tariff heading “Prepared Foodstuffs; Beverages, Spirits and Vinegar”. This includes preparations of meat, of fish, of crustaceans or molluscs; sugars and sugar confectionery; and cocoa. A tremendously long list follows of items that might be imported into South Africa. If one looks at the production of food in South Africa itself, one finds under surcharge item 166 on page 39 that pharmaceutical products are going to be hit, as are fertilizers. Since the cost of fertilizers is part of the cost of the basic production of the farmer in South Africa, obviously these things are going to affect, and affect badly, a number of areas of expenditure in South Africa. The last heading I want to refer to is on page 43. It is apparent that one has to pay extra if one does not want to get wet, because footwear, headgear, umbrellas, sunshades, whips, riding-crops, etc., are also going to be subjected to this surcharge.

“Fat cats”!

That is absolutely right: It is the “fat cats” who are getting fatter at the expense of the South African public.

Do you buy South African?

Certainly we buy South African, but South Africa does not manufacture everything. It does not manufacture everything by any means. Many items are imported which are not manufactured here.

So, when it comes to the record of this Government on inflation over the last few years, I believe it is one of the worst records in the Western world today. Without a doubt inflation is higher in South Africa than in many, many other countries. Let me give an example. I see that the former Minister of Agriculture is present. In South Africa the price of mealie meal is R152 per ton while overseas it is R95 per ton. This gives one an idea of how the Government has inflated prices in South Africa.

Why do you hate the farmers? [Interjections.]

This is simply another example of how this Government is increasing inflation in South Africa. We must realize, however, that, obviously, we had an election a fairly short time ago. At this time prices and the inflation rate are being increased, while in two to three years time when the Government starts thinking about another election, they will probably suddenly be the big inflation fighters again and they will keep prices down.

There is a last matter to which I want to draw the hon. the Minister’s attention. I have spoken on this subject before. As I think the hon. member for Langlaagte suggested, we are using the customs and excise tariffs as protection machinery for local products. This, of course, we support, but certain problems arise out of this to which I do not believe the Government has paid sufficient attention. Where, for instance, one protects a raw material in South Africa by placing duties on the imported raw material, the result can be—as in the case of mealies—that the price of that particular commodity on the international market is considerably lower than the price of that same commodity in South Africa. There are many, many areas in which this applies. It is protection of the local industry, and in many instances we do agree with it. A problem arises, however, when that basic commodity is then utilized to produce a consumer article which has to compete with an imported consumer article made from the raw material which is sold to that company at a very much lower price overseas. I believe that attention should be given to this particular aspect because a number of industries are finding it extremely difficult to compete on the South African market with imported consumer goods on account of the fact that the basic raw materials from which they manufacture those consumer goods are so expensive in SouthAfrica. I commend this to the hon. the Deputy Minister for his consideration’

As hon. members are aware, the hon. member for Yeoville has motivated his amendment. I have dealt predominantly with the second leg of that amendment, the leg dealing with the cost of basic foodstuffs, the costs of the various items which have been increased. I shall certainly be supporting the amendment moved by the hon. member for Yeoville.

Mr. Speaker, I am afraid that there is only one hon. member of the Opposition whom I can thank for his support of this measure. That is the hon. member for Langlaagte. I therefore convey my sincere thanks to the hon. member for Langlaagte for his support of this measure. [Interjections.]

†The hon. member for Yeoville said that he and his party supported the principles contained in this Bill. Then he nevertheless moved an amendment in which he stated why he could not support the Bill. I find that such a contradiction in terms that it is hardly possible to understand it.

According to your interpretation.

No, it is not according to my interpretation. It is according to the hon. member for Yeoville’s own words. Firstly he states very clearly that he supports the principle contained in the Bill.

Read my amendment if you want to understand what I was driving at.

Then the hon. member goes on to say that he cannot support the Bill on account of two specific reasons. He lists those two reasons in his amendment. It is my submission, however, that the first one has nothing whatsoever to do with the Bill itself.

*I believe that the hon. member for Yeoville was only trying to make a little political capital out of a purely technical Bill.

He is always doing that!

That is the only reason, I believe, why the hon. member is doing this. However, I cannot understand why he is doing it. When one examines his amendment, it amounts to only two things. Every time the hon. member says that absolutely nothing is being done to protect the consumer. The hon. member for Port Elizabeth Central alleges that we are preparing for an election. However, that is exactly what the hon. member for Yeoville is doing. He is so intent on currying favour with the consumer that he is quite prepared to use the Bill for this purpose as well. [Interjections.]

I want to react to the first statement made by the hon. member for Yeoville in his amendment, which reads as follows—

However, I want the hon. member for Yeoville to tell me what this has got to do with customs and excise.

It has everything to do with the principle of customs and excise.

Mr. Speaker, I can understand the position with regard to the effect on customs and excise, but what the control over the matter has to do with the Department of Customs and Excise, I cannot understand at all, because they have absolutely no say and no control in this connection. I think the hon. member is simply playing a petty political game. [Interjections.] Then the hon. member should have spoken of the legislation and not of the decline in the value of the rand. That has nothing to do with customs and excise as such. It has nothing to do with the legislation. [Interjections.] The hon. member is now trying to escape from his dilemma by making all kinds of interjections. I am saying that the value of the rand is not determined by customs and excise levies. The value of the rand has nothing to do with customs levies. The value of the rand is determined by other factors, such as inflation in South Africa and overseas. Now the hon. member may react by telling me that customs levies have an effect on inflation. However, what does not have an effect on inflation when it causes a price increase? [Interjections.] The value of imports has an effect on the value of the rand, as do the value of exports and interest rates. Interest rates have an enormous effect on the value of the rand. I want to ask the hon. member what customs and excise has to do with the fixing of interest rates in South Africa. [Interjections.] Really, Sir, the hon. member now realizes that he has made a fool of himself, and he is trying to get out of it by making all kinds of interjections.

The value of the rand is also determined by the amount of capital which enters and leaves South Africa; it is also determined by exchange control measures; it is determined by productivity in South Africa; it is determined by the fiscal policy. I think I should leave this argument of the hon. member at that and I should proceed instead to a discussion of the other arguments advanced by the hon. member in his speech.

In the second part of his amendment, the hon. member says that his party declines to pass the Second Reading of the Bill unless and until the Government undertakes—

Has that not got anything to do with the Bill either?

No, it has got something to do with the Bill, and therefore I am going to react to it. The hon. member must tell me to which articles he is referring here. His amendment refers to “those articles”. To which articles is he referring? The hon. member must also give us an answer to another question. There are two kinds of levies, one of which is concerned purely with fiscal arrangements. The other levy is concerned with protecting private industries in South Africa. The hon. member must distinguish between two levies. I challenge the hon. member to take the comprehensive tariff book and to tell me whether we should identify those levies that are purely concerned with fiscal measures, or whether we should identify those that are purely concerned with protective measures in respect of the local manufacturing industry. We can go one step further. With this amendment of his, the hon. member is creating the impression that customs levies are imposed quite haphazardly in South Africa. Surely this is not true. Surely the hon. member for Yeoville knows much better than this. I have the highest opinion of his intelligence, and therefore I cannot believe for one moment that he does not know that customs tariffs are not imposed haphazardly. There is a Board of Trade and Industries which considers every application in respect of protection tarrifs and which considers all aspects of industry. It also takes into consideration the question of overseas competition with local products, the point raised by the hon. member for Port Elizabeth Central. This is the body which considers all these matters and this is the body which considers all these matters, repeatedly. It is only when this board has made the necessary recommendations to the Minister that these tariffs are laid down. If the hon. member wants certain articles to be exempted from levies, I invite him or his informants to tell us which specific articles these should be. An application can then be made to the Board of Trade and Industries with a view to investigating such articles in order to ascertain whether they can be exempted from levies because of the adverse effect which such levies would have on the cost of living in South Africa. If the hon. member did this he would in my opinion be making a positive contribution, for then he would be identifying the type of levy, whether it be a fiscal levy or a protection levy, which can be investigated so that we can reduce it, if not abolish it completely, as he says in his amendment.

An import levy has nothing to do with the Board of Trade and Industries; it is purely a fiscal levy.

I apologize to the hon. member, for then I have misunderstood him. He was actually referring to the 10%. Nevertheless, my argument remains correct. In the last part of the Bill, reference is made to the surcharge which has been imposed on certain articles. The hon. member for Port Elizabeth Central referred to some of these, but the hon. member did not refer to the great many that had been excluded.

I did refer to them.

Most have been excluded. When one looks at tariff heading 28 on page 39, one sees the great number that have been excluded.

However, this is a fiscal measure, and because it is a fiscal measure which included everything which was not excluded under the GATT agreement—reference is made to this in the schedule—we took the step, at the time when all these were included, of appointing a committee under the chairmanship of the Director-General of Industries, Commerce and Tourism. That committee investigates applications which are made for the consideration of possible exemption from surcharge.

I repeat my invitation to the hon. member for Yeoville, if he wants to identify certain items which he believes should be excluded, to contact the committee in this connection. The committee will then investigate these, and if they consider it possible within the fiscal context, they will make the necessary adjustments.

The hon. member for Port Elizabeth Central made a great fuss about his statement that we could expect to collect R700 million from this. But this is simply a figure he has sucked out of his thumb; the hon. member cannot prove it statistically. [Interjections.] He is making a great fuss about something which has no foundation. Our estimate is R550 million, and if our estimates are wrong and we collect more, our financial position will be so much better. Then we shall be able to reduce this surcharge sooner, if we cannot dispense with it altogether. We must remember that it is a temporary measure and not a permanent one. It has been introduced for fiscal reasons.

Has the R550 million also been sucked out of someone’s thumb?

No, the amount of R550 million was estimated on the basis of sound statistical information which the department has available to it. It is an estimate of the expected revenue, and just as any budget is an estimate, this is a fair estimate of the revenue based on statistical information which we were able to obtain in this connection.

The hon. member also referred to the question of imported motor vehicles. I agree with the hon. member that this is a problem. We are aware of the fairly wide-spread reports which have appeared in the Press recently and which have suggested that some important offence was being committed and that some of those vehicles might find their way to South Africa. I hope that by raising the point in this House, the hon. member was not implying that they could indeed find their way to South Africa. We say they could “possibly” find their way to South Africa. In co-operation with the South African Police, the Department of Customs and Excise is at the moment conducting a very thorough investigation into this particular matter. As soon as the necessary investigations have been completed, they will take action, if necessary. I therefore believe that the point made by the hon. member for Yeoville is important. That is why it is receiving the attention of the Commissioner for Customs and Excise and the South African Police at the moment.

†The next point of the hon. member was his reference to the Supreme Court. I think he used clause 24 in this regard.

Clause 6, page 13.

If the hon. member reads this specific clause he will find an appeal must be lodged within a period of 90 days. In other words, what we want to say is that where it is specified that an appeal can be made to the Supreme Court it is in a case where the period is shorter than two years. Where it is not referred to in a specific clause, there is no exclusion of an appeal. In other words, in terms of the clause which refers to agents, any agent, or any person who has an agent, can appeal to the Supreme Court. It is not excluded by the Bill. He has a period of two years for his appeal to be lodged. However, where we do write it into a clause, it will be a shorter period. If the hon. member looks at the specific clause, he will see that the period stipulated in which a person has to appeal is 90 days.

If something is proved to the satisfaction of the Commissioner one cannot appeal except on the grounds of mala fides, but there will not be mala fides.

I cannot enter into a legal discourse with the hon. member, because I am not a lawyer. However, I have discussed this matter very thoroughly with my department and with the lawyers. I was specifically told that if the agent, or the person acting on behalf of the agent, is not satisfied and if he believes that he is being prejudiced, he does have the right to appeal and that there is nothing in the legislation which denies him that right. The only reason why that provision was written into the other clause was to limit the period within which he could appeal to 90 days. That is the only reason. In terms of common law, the other one can then appeal within a certain period—I believe the reply I got was two years.

The hon. member also referred to the question of stolen goods. Under the provisions of the Customs and Excise Act of 1964, the duty on any deficiency in a customs and excise warehouse shall be paid forthwith on demand after detection of such deficiency. That is the position in terms of the Customs and Excise Act. It is also laid down that the duty which is owing constitutes a debt to the State. In other words, whether or not goods have disappeared, it constitutes a debt to the State. The legal position is, therefore, that where there is a deficiency with regard to ad valorem excise goods as a result of a theft at a licenced warehouse, the duty which is owing cannot be written off. That is the legal position. Not only goods that are subject to ad valorem excise duty, but also imported goods stored in licensed warehouses and all excise goods manufactured in licensed warehouses, are involved. In the case of theft, goods on which the duty has not yet been paid are removed from licensed premises and used. For administrative reasons, it would not be desirable to make provision in the Bill for remittance or for discretionary powers in respect of the duty on goods which have been removed from licensed premises as a result of theft. It is normal practice for dealers to insure their stock against theft and to provide in this way for any duty which may be owing to the State in this connection. I think this is the reply I wish to give the hon. member in this connection.

Do you believe that is reasonable?

Mr. Speaker, the hon. member asks whether I believe it to be reasonable. I want to tell him that I certainly believe it to be reasonable.

†The hon. member also inquired about the addition of 15%. I can reply very briefly, but I think it would then probably not be complete. For countervailing customs duty purposes the value of imported goods is required to be established at the same point as the value for locally manufactured ad valorem excise duty goods, or at a comparable point. The most suitable point is a place where the goods, imported and local, are cleared for home consumption. That is the point where it should be done. The value for customs duty purposes, however, is the normal price of the goods in the exporting country and the cost and charge between the points and the place of clearance in the Republic have to be added to the customs value. This also includes the cost of transport. In view of the numerous charges involved, an average figure has been calculated to cover such expenses between the free-on-board point and the free-on-rail point at the point of landing in the Republic. This is expressed as 15% of the customs value to facilitate clearance of imported goods. This principle was applied to sales duty, which has since been replaced by ad valorem excise duty.

*What this actually means is that the concepts of “free on board” and “free on rail” are made equivalent at the point of clearance so that the same tax can be levied. This is the reply I want to give the hon. member in this connection.

It seems to me that I have now reacted to just about all the points raised by the hon. member.

The family point.

If the hon. member still does not know who his family are, I shall never be able to help him. The hon. member also referred to the question of officers and directors in clause 14(2)(a)(i) and (iv). I quote—

1. (2)(a) For the purposes of subsection (l)(d) two persons shall be deemed to be related only if—

• (i) they are officers or directors of one another’s businesses …

I quote further—

• (iv) any person directly or indirectly owns, controls or holds 5% or more of the equity share capital of both of them

I just want to tell the hon. member that these provisions have been taken verbatim from article 7 of the agreement. If the hon. member has certain proposals and if he will put them in writing, we are prepared to look at them and we are also prepared to investigate them properly. If the Act then has to be amended, we shall introduce an amendment next year. I can understand the hon. member’s argument and I also understand his criticism in respect of paragraphs (i) and (iv) of the proposed subsection (2)(a). However, I want to tell the hon. member that these paragraphs have been taken verbatim from the code of article 7 and we should not like to amend them without a proper investigation. If the hon. member would like to put his proposal in writing, therefore, we shall look at it.

I want to convey my sincere thanks to the hon. member for Gezina for an interesting speech. I also want to thank him for having supported the Bill on behalf of this side of the House. The hon. members who support this amending Bill understand it. The others can also understand it, but they do not want to, because of the little bit of political capital they can make out of it.

I have already thanked the hon. member for Langlaagte for his support of this Bill. The hon. member also expressed the criticism that more powers were now being granted. I would not like to say that the hon. member wants to make political capital out of this, because the hon. members of the CP all referred to proposals which are before the State President at the moment in respect of the consitutional dispensation on which no decision has yet been taken and about which no announcements have been made. They used it as an opportunity for making a little political capital in this House.

As far as excise taxation is concerned, it is essential in most cases that it be imposed immediately. That is the basic reason why the clause concerned is worked the way it is. It is not in order to grant more powers. It is to facilitate the administration in respect of the implementation of excise tax. I think that is the only reason why this clause has been included in the Bill. There are no ulterior motives. The clause is simply intended to streamline the administrative process.

I have already replied concerning the question of surcharge. It was introduced with the greatest discretion and responsibility because of a specific fiscal consideration. Therefore I have nothing to add to what I have already said about it.

The hon. member for Wellington referred to clause 12, which deals with distilling licences. I should like to associate myself with the hon. member for Wellington by saying that this concession which we have been prepared to make is a good one. In this way, we can at least preserve something of that tradition for South Africa. I think this aspect could also be a tourist attraction. In connection with this aspect I think in particular of Kleinplasie at Worcester. This could be a tourist attraction. We shall really investigate the matter without allowing any abuse. However, one must guard against any abuse of this concession. If we can turn this into an asset to attract bona fide tourists, without any abuse, I believe that the Commissioner for Customs and Excise would consider the matter carefully. It is also a good idea to develop it in this connection.

†The hon. member for Amanzimtoti followed the same line and said that he supported the principles contained in the Bill but that he did not want to vote for it. He used the amendment moved by the hon. member for Yeoville as a reason for not wanting to support the legislation. However, I want to challenge the hon. member to point out one clause in the Bill that he does not support in principle. A lot of the points raised can be discussed during the Committee Stage, but if I am correct, the words used by the hon. member for Amanzimtoti are that he supports the Bill. He described it as being something good. Yet he uses the amendment moved by the hon. member for Yeoville as an excuse for not supporting the Bill.

The hon. member also referred to the duty on tractors. This is a very difficult matter. It is true that the duty on imported tractors is levied to protect ADE, but it is very difficult to make a calculation as to what the cost implications of the engine as such will be.

No, it is simple.

No, it is not so simple. There are delection costs, and with regard to most of the vehicles which have to use ADE engines or gear-boxes, the overseas suppliers will have to give us the benefit of certain deletion costs. Indeed, we have proof of the fact that those deletion costs do not give the full benefit to the South African manufacturer. As a result, the cost of the tractor is higher than would normally be the case, and this is attributed to the ADE project, which is in fact not correct. It was recently calculated that the cost of a particular product would go up by 42%. The cost of the ADE engine would represent only 4% of that increase. That is the truth; these are proven facts.

40% surcharge.

The problem is that this kind of exploitation is used to attack the ADE project, but in actual fact the cost escalation is not due to the ADE engine, but to other factors.

It will now be 40% higher in any event, irrespective of what that cost is.

The hon. member is now referring to something I cannot understand, so I shall not react to it.

The hon. member for Amanzimtoti also referred to the review of levies. In my opinion, it is important that customs levies be reviewed regularly. However, that right of review is not vested in the Department of Customs and Excise, but in the Board of Trade and Industries. The hon. the Minister of Industries, Commerce and Tourism and I have already discussed the fact that customs levies that have been imposed should be reviewed periodically or regularly. However, I want to point out that many of these levies are in any event periodically reviewed and adjusted at the request of either importers or manufacturers or consumers. In this regard, I may mention the example of the customs levy on leather, which has been reviewed and adjusted twice within seven months in the light of altered circumstances and in order to make the necessary adjustments. However, I think the point which the hon. member raised is accepted. I think it is a matter to which we are already giving attention in the department, because we believe that these reviews should take place periodically or on the basis of random samples in some way.

Can there not be a maximum period?

That is terribly difficult to say. The hon. member wants to know what the periods of review should be. I think they would vary from one item to another.

But should there not be a maximum period?

I should prefer not to react now to the question of whether there should be maximum periods, because I think the maximum would vary from one product to another. In any event, it is a matter to which we are giving attention at the moment and to which we shall also give attention in future.

The hon. member for Port Elizabeth Central referred to clause 11. He wanted clarification about the question of whether the qualifying provisions in the proposed section 60(2)(b) also referred to the proposed section 60(2)(a). I think the hon. member said that according to his interpretation of the Bill, the provisions in the proposed subsection (b) were only applicable to renewal and the refusal, withdrawal or suspension of a licence. I have read the relevant provisions very carefully. I do not want to say the hon. member is correct. However, I am prepared to go into the matter, and I shall let the hon. member know whether this is in fact the case and what the position is. My interpretation of the provisions—like that of the hon. member—is that they are only applicable to the proposed subsection (b).

If I am wrong, I shall let the hon. member know. However, I should like to confirm that they are only applicable to the suspension, the withdrawal and the renewal of licenses, as presently stated in the legislation which is before us. So the hon. member is quite right.

I think I have reacted to most of the points raised by the hon. members. This brings me to the hon. member for Wellington, however. I want to thank him very much for having introduced a lighter note into a debate which is so dry and technical. I feel a little ill at ease myself, and when the hon. member spoke in a lighter vein, it immediately made me feel more at home, because many of these technical things are still a little beyond me, and on top of that the hon. member for Yeoville has the habit of asking so many questions. Fortunately, he asked only 12 questions today. I was afraid, however, that he would ask a question about every clause. Then there would have been 28 questions, and I do not know whether we would then have finished before supper tonight. However, I just want to indicate that I believe that the speech of the hon. member for Wellington also had some cultural value. Therefore I think he should have his speech typed out neatly, or written out in ornamental writing, and then he should have it framed and hung at Kleinplasie Museum so that everyone can read it, because I think it is really worth reading. In my opinion, that hon. member really succeeded in discussing this cultural product in a lighter vein and in presenting it in an attractive light.

I should now like to conclude my reply to the Second Reading debate. However, I want to convey my sincere thanks to hon. members for their speeches and their ideas, some of which were very constructive. I want to thank the hon. member for Langlaagte once again for his party’s support.

Question put: That all the words after “That” stand part of the Question,

Upon which the House divided:

Mr. Chairman, I move the following amendments—

1. (1) On page 9, in line 54, to omit “(a)”;
2. (2) on page 11, in line 1, to omit “(b)”.

I have already motivated this amendment, and the hon. the Deputy Minister, in his reply to the Second Reading, indicated—that was right at the end of his speech—that the interpretation indicated by me and by the hon. member for Port Elizabeth Central was indeed the correct interpretation. Therefore one would assume that the hon. the Deputy Minister would indeed accept this amendment.

Mr. Chairman, I am afraid that I cannot accept this amendment. The effect of this amendment will be that the open discretion of the Commissioner in terms of which the renewal of a licence could be refused or in terms of which a licence could be suspended or cancelled will now be restricted to instances in which the applicant has been convicted of an offence under the Act, or in which the applicant has been convicted by a court of law of an offence involving dishonesty. Should the amendment moved by the hon. member for Yeoville be accepted, it will have the effect that the commissioner will not be in a position to refuse any application for a new licence or for the renewal of any licence. He will also not be in a position to cancel or suspend an existing licence. This will place the commissioner in almost an impossible position, and therefore I cannot accept the amendment.

Amendments negatived (Official Opposition and New Republic Party dissenting).

Clause agreed to.

Clause 14:

Mr. Chairman, I move the following amendment—

I should like to motivate these amendments briefly as I did in the Second Reading debate. It is quite impossible, if there are two companies concerned, that the companies could be officers and directors of each other; it is not a physical or legal possibility. If the provisions of the proposed subsection (2)(i) were to remain in their present form, they would therefore be meaningless.

Secondly, as we have indicated, merely to hold 5% of the shares of a company gives one no control, no say, nothing at all in it. This is quite a ludicrous position should one leave it in that form. The hon. the Deputy Minister said these were provisions he would like to consider. He also said that he would like to have them in writing, but I nevertheless prefer moving them. If he does not accept them, then at least I expect him to consider them and to amend the legislation at some future occasion.

Mr. Chairman, I have indicated already that I cannot accept the amendment. I shall, however, regard this as a written request. We shall look into this and we shall let the hon. member know of the outcome.

Amendment negatived (Official Opposition dissenting).

Clause agreed to.

Clause 18:

Mr. Chairman, I move the following amendment—

The law requires that two copies of the agreement must be kept in the commissioner’s office, but unless people have the right to see them, there is no point in having them in the office. Otherwise one can obviously only get them if one subpoenaed the commissioner and asked him to produce them in a court case. It is perfectly true that there are private agencies which produce copies of these things, but everybody who has ever seen them will appreciate that if one actually has to go to the expense, when one is involved in one particular problem on one occasion, to have to buy this whole service, it is a tremendous expense which I think is quite unwarranted. When the law requires that these agreements, opinion, commentaries and explanatory notes should be made available, I think they should be available for public inspection. I hope the hon. the Deputy Minister will accept the amendment.

Mr. Chairman, in his Second Reading speech the hon. member referred to this aspect as well. What his representations amount to is that these codes relating to the nomenclature should also be available to the public. I wish to point out to the hon. member that the clause in question only comes into operation on 1 July 1983 and in the interim; several discussions will be conducted with the interested parties in regard to the whole matter. In the process of discussion, notice will be given of the contents and they will be generally available. If further amendments have to be effected, they will have to be effected during the 1983 parliamentary session by way of legislation. The explanatory note will be made available to the public in the process. We therefore intend doing what the hon. member asks—in other words, we intend making the information available to the public as far as possible. However, we think that at this stage it is not yet necessary because many discussions still have to take place and amendments could be proposed. If, then, amendments are to be submitted, then next year’s parliamentary session will be the appropriate time for doing so. By that time the preparatory work will be completely disposed of. Therefore I do not think it would be appropriate for us to accept the amendment at this stage.

Mr. Chairman, I am sorry but I am not sure that the hon. the Deputy Minister appreciates what I am trying to do. The fact that this clause only comes into operation on 1 July 1983 does not mean that we should pass a half-baked law now. If a law is not right now, then it should be corrected now. Whereas we appreciate that there may be an endeavour to inform the public, the reality is that from the date that this legislation becomes the law, every member of the public should have the right to have a look at all the documentation. This documentation has to be kept up to date. I want to ask the hon. the Deputy Minister: Firstly, why is this being kept in the Commissioner’s office if the public cannot come and look at it? Secondly, if a member of the public is not prepared to go to the expense of subscribing to a service which makes all this available at some considerable expense to himself, how else is he going to get it? Thirdly, if there is an up to date set of these documents which actually has the force of laws why cannot somebody go to the office and ask to see the up to date copy in order to determine what the present position is? With the greatest respect to the hon. the Deputy Minister, I just cannot understand why he wants to keep something in an office if nobody is entitled to look at it. It just does not make sense.

Mr. Chairman, I can perhaps try to assist by saying that with regard to the amendment which the hon. member has moved to clause 18, it has been mentioned that clause 18 is in line with the provisions of section 47(8) of the Customs and Excise Act where it is stipulated that the Commissioner of Customs and Excise shall keep two up to date copies of the explanatory notes to the nomenclature issued by the Customs Co-operation Council in Brussels. In this case it is also not stipulated that these two copies must be made available to the public; in other words, the clause is exactly in line with section 47 of the Act. As this clause only becomes effective on 1 July 1983, I will definitely ask the Commissioner to look into this matter to see whether the document and other related documents could not, as in the case of the explanatory note, be made public by means of a notice in the Government Gazette. It is also pointed out that any amendment to the agreement which affects the principles thereof, must be embodied in the Customs and Excise Act before it acquires the force of law. I will request the Commissioner of Customs and Excise to look into this to see why it cannot be done.

Amendment negatived (Official Opposition dissenting).

Clause agreed to.

Clause 24:

Mr. Chairman, I wish to move the following amendment—

The hon. the Deputy Minister in his reply to the Second Reading debate said that there is always a common law right to appeal. However there is significance in the words “if he approves to the satisfaction of the Commissioner that” and then there are three things which have to be proved. The issue is then not, when one goes to the Supreme Court, whether it is proved to the satisfaction of the Supreme Court but whether the Commissioner was bona fide in his approach as to whether or not he regarded it as proved to his satisfaction; in other words, if the Commissioner makes a mistake, bona fide, there is no question of going to the Supreme Court. The issue lies in the words “prove to the satisfaction of” and everybody who knows the law, with great respect, knows that that means that it gives complete discretion to the Commissioner and there is no question of an appeal. There can only be a review and that review has to prove mala fides and that is quite a different situation. I ask therefore that the hon. the Deputy Minister consider the amendment favourably.

Mr. Chairman, I have already indicated to the hon. member for Yeoville that I cannot enter into a dispute with him on legal matters and I am not a legal man. The information which has been made available to me is that the normal inherent common law power of review of the Supreme Court offers sufficient protection to parties who seek legal redress. Other court procedures, that is declaratory orders, are in any event available to a party who believes that he has been unjustly treated. As I explained in my Second Reading reply there is, as far as the information available to me from the legal advisers and the department is concerned, no need for introducing such an amendment into this clause and I therefore cannot accept it at this stage.

Amendment negatived (Official Opposition dissenting).

Clause agreed to.

House Resumed:

Bill reported.

Mr. Speaker, I move, subject to Standing Order No. 56—

Mr. Speaker, in the very short time that is left I think that there are a number of things to which one should draw attention. Firstly, the hon. the Deputy Minister said during the Second Reading debate that we had agreed with the principles of the Bill, and he quoted from the amendment. If the hon. the Deputy Minister reads the amendment he will see the following words—

Therefore to suggest that we approve of the principle of the Bill by using these words is—and I say this with great respect—not quite what I expected from the hon. the Deputy Minister in the present circumstances. I am also sure that he is big enough to get up and say that he misread the amendment.

Secondly, I want to say that I am a little unhappy because a number of these provisions, as a result of the consultation that is going to take place between now and next year, particularly relating to the GATT provisions, are going to have to be reviewed. I did not get an answer to the question with regard to the interpretation of clause 18, and in particular the issue arises as to which overrides which here. In other words, if there is a conflict, what prevails? Are we going to have the situation where the GATT documents prevail or where the three sections of the Act prevail? I find that there is a problem in relation to this. When one looks at clause 18 of the Bill one sees that the proposed new section 74A(1) states that the interpretation of sections 65, 66 and 67 shall be subject to the GATT documents, but then in subsection (3) it states that the provisions shall not derogate from the interpretation which would but for that subsection be given to sections 65, 66 or 67. What then is the purpose of putting this in? I want to ask the specific question: What actually prevails—65, 66 or 67 or the GATT opinions if there is a conflict? That to me seems to be an important issue.

Furthermore, we are still concerned about the powers of the Minister. We are still concerned about some of the interpretations where the amendments have not been accepted and, even though the law will go onto the Statute Book, we hope that it will be reviewed in the next 12 months so that when we come here next time some of the solutions that we have suggested will be accepted after due examination by the hon. the Deputy Minister and the people concerned.

Mr. Speaker, I reread the amendments by the hon. member for Yeoville very carefully but I am afraid I shall not be able to give him a reply.

If I have to give a quick interpretation, I would say that the sections of the Act will prevail and not the GATT regulations. We shall take a look at this, however. If there is any doubt, we shall have to remove it. In that respect I agree with the hon. member. As I interpret it, the sections of the Act will prevail and not the GATT regulations. However, we shall consider the point which the hon. member for Yeoville raised and then, if need be, we shall rectify the matter next year by means of an amendment.

†I want now to elaborate a little on what the hon. member for Amanzimtoti said about the price of tractors. It is true that the duty on tractors was imposed by the Board of Trade and Industry. However, what I want to say is that should these vehicles be fitted with Atlantis diesel engines the full excise duty will be rebated as well as the full countervailing customs duty. In other words, both duties will be rebated if that tractor is fitted with an Atlantis diesel engine. I am merely making this point to clear up the matter because it may have led to confusion.

Question agreed to.

Bill read a Third Time.

Mr. Speaker, I move—

While it has unfortunately not been possible to avoid modest increases in the rates of income tax, it is a pleasure for me to be able to remind this House that for the third successive year we have been able to get by without any changes in the rates of taxes and duties imposed in terms of what are generally referred to as the revenue laws. The revenues from this source continue to rise, which is in some measure a reflection of the underlying strength of the economy.

In accordance with the practice which was resumed last year, an explanatory memorandum has been made available to hon. members, leaving me little to say here, except perhaps to sketch the background to certain of the amendments.

Hon. members will be aware that in every country a constant battle of wits is being waged between the fiscus and reluctant taxpayers. The Stamp Duties Act provides one of these battlefields. Even though the rate of stamp duty is so low, the amounts involved are sometimes substantial, especially in the case of take-overs and mergers, and act as a spur to the experts to seek legal ways of avoiding liability.

Broadly speaking, liability for duty arises when the beneficial interest in a marketable security passes from one person to another. Some years ago, in a case where two large companies were amalgamated and the sanction of the court was needed in terms of the Companies Act then in force, someone realized that liability for duty could be avoided by the simple expedient of cancelling the shares of the company which was being taken over and issuing new shares in the surviving company to the shareholders concerned. Legislation to prevent a repetition of this type of scheme was put through soon afterwards and was successful. More recently, other avenues made available by the Companies Act have been made use of, with considerable success in so far as the tax-planners are concerned. The schemes which have been evolved are usually very complicated and not such as one would expect in a normal business transaction. The more popular type of scheme frequently involves the conversion of shares, the ownership in which is in reality changing hands, into redeemable preference shares. The latter shares are then redeemed and thereafter new shares are issued to the new owners. As the law stands, no liability for stamp duty arises in these circumstances.

The amendments being made in terms of the Bill are designed to ensure that liability for duty will in future arise in all the known types of schemes and perhaps in others besides. Should the tax-planners succeed in getting one step ahead again, we shall not hesitate to seek the authority of this House to amend the law once more to head them off and to ensure that duty is legally payable whenever there is a change in the beneficial ownership of marketable securities.

*The other provisions of the Bill deal exclusively with concessions and administrative provisions.

In accordance with our policy of ongoing tax reform, it was decided a few months ago to abolish the tax on cinematograph films because the revenue from that tax had been dwindling and the meagre revenue from that source did not justify the high cost of collection. An announcement to this effect was made by the hon. the Minister of Finance in his budget speech, and the provisions of clause 11 give effect to this decision.

Universities and technikons are now by law permitted to obtain funds by issuing marketable securities. As such institutions are in essence no more than extensions of the State, it would be unfair to subject the issue and transfer of their shares to stamp duties and marketable securities taxes, and accordingly there are several provisions in the Bill granting the required exemptions from those taxes.

Hon. members will recall that the Income Tax Bill, which was introduced recently, provides for the increase, to 10% per annum, of the interest rates payable on any outstanding tax due under that Act. It is felt that the interest rates on taxes due payable in terms of other Acts administered by Inland Revenue should be uniform as far as possible, and hence the proposed amendments to these particular provisions of the Marketable Securities Tax Act and the Transfer Duty Act. As will be noted, the interest rate is slightly increased in one case, while it is slightly decreased in the other.

Finally, I should like to draw attention to clause 8. As explained in the explanatory memorandum, some uncertainty has developed about the calculation, in certain cases, of the amount of annual duty payable by companies. Under the circumstances it is deemed advisable to clarify the position beyond all doubt. This clause effects the necessary amendments.

Consequently I feel at liberty to submit this Bill to the House for favourable consideration.

Mr. Speaker, when the hon. the Minister introduces a piece of legislation that does not entail a burden for the taxpayer, he can of course expect support from us. We are therefore supporting the Second Reading of this measure, in fact the Bill as a whole. I think he made a very fascinating remark about the battles between the fiscus, the reluctant taxpayers and the tax planners. I must say that the taxpayers are somewhat at a disadvantage, and I say that for two reasons. One reason is that as soon as they evolve a method of legitimately avoiding tax, the legislature is asked to change the law. They therefore have that disadvantage. I must tell the House, however, that in this battle of wits, there is also another disadvantage to which they are subject, and I am referring to the team that the Secretary for Inland Revenue has. With him and his team I must say that the tax planners are at a very grave disadvantage. With the talent available to the Secretary for Inland Revenue, I think the battle is getting unfairer as time goes on. [Interjections.] I do, however, think that the Secretary and his staff enjoy this battle. It is, in fact, part of what goes on all over the world. If people find legitimate ways of getting round a situation, one has to see what public policy requires. There is, however, a difference between these who find legitimate ways of avoiding tax and those people who seek to avoid tax by illegitimate means. Whereas the one is a battle of wits, which I think is enjoyed, the other is one which has to be stamped out. That is the approach we on these benches adopt and I am sure that the hon. the Deputy Minister will agree with us.

There are a couple of things we are very happy about. There is, for instance, the question of the exemptions relating to the Housing Commission on stock they can issue and to the universities and technikons both in regard to marketable securities tax and stamp duty. In the case of the Housing Commission what is particularly important is not the exemption but the fact that it can now actually raise this money. That is why we support this.

One of the problems one has is whether from the point of view of enter-entity accounting it should not actually be made clear what revenue is being sacrificed. In other words, when for instance the Parks Board, the technikons, the universities and so on are exempted from stamp duty, from an interdepartmental accounting point of view it actually has certain disadvantages because one really does not know what is being saved by the particular entity. It is not always a department of State. It is of course a separate legal entity.

Then there is the question of reducing the rate to 10% for late payment of marketable securities tax. I am quite sure that people will welcome that. One must, however, bear in mind that it is much cheaper to pay 10% on a late payment than to pay overdraft rates. What therefore worries me is that, even with the 10%, people are actually going to welcome delays in payment because if overdraft rates are over 20% it pays one to pay this tax late. Obviously, some other action must be taken to ensure that payment is made timeously.

In the case of transfer duty, however, it is being dealt with the other way around. There the rate is being increased from 7½% to 10%. Therefore in actual fact the rate is being reduced for the share dealer while it is being increased for the property owner. That does not appear to me to be in accordance with what I should like to see happening and I somehow doubt whether the hon. the Deputy Minister would like to see this happening.

Another point is that in my opinion the period of six months in respect of transfer duty is too short, particularly in view of the nature of some of the transactions that have to be concluded in respect of deeds of sale and so on when purchasers often do not know what their rights are. While I cannot move an amendment on this, I hope that someone will give consideration to extending that period from six months to 12 months.

In which clause is that?

That is the transfer duty provision in clause 3 on page 5 of the Bill.

Then, I also have a problem with the removal of the cinematograph films tax. We would support it, but in fact this concession has not been passed on to the consumer. The removal of this tax has merely meant that the people who own the cinemas have had their profits increased by approximately R900 000, I do not think that that is right. Not a single person going to the cinema has actually had the benefit of the removal of this tax. I must ask the hon. the Deputy Minister what he is going to do about that. Did he want to give a present to the owners of cinemas? Or did he want to say that, because the administration of this is so difficult, it is not worth collecting the tax and therefore it should now somehow be passed on to the consumer?

It is not passed on.

Well, it certainly has not been passed on.

It is still in existence.

The point is that it is going into the pockets of the people who own the cinemas and I do not think that that is right. That is the one thing in this Bill which to my mind leaves a little bit of a bitter taste.

Business suspended at 18h30 and resumed at 20h000.

Mr. Speaker, when business was suspended I was about to deal with clause 6 of the Bill, which seeks to amend section 23 of the Stamp Duties Act, 1968. It seeks to extend the payment of certain duties in the event of any compromise, arrangement or reconstruction of any company or its affairs, including a scheme for the amalgamation of two or more companies. There are a number of things about this to which we want to draw the attention of the House, and about which we want to raise certain questions.

Firstly, we have no objection in principle to the loophole being closed. When an amalgamation between two companies indeed takes place, or in the event of a take-over of two companies, there is in fact an effective change of shareholding control as a result of that. In those circumstances we agree that the stamp duty should be paid. I believe there is no objection to that in principle.

Secondly, if that is done in such a way that it results in no duty being payable, although the result is still the same, we also believe it is right that a stamp duty should then be paid. One matter which does give rise to a degree of concern, however, is the question of whether, by reason of the wide wording, of this proposed new section 23, an ordinary reduction of share capital or a cancellation of share capital has not now indeed also been drawn into the net. If a company merely wishes to reduce its share capital or if it has lost some of its share capital, and it wants to reduce the actual amount of the capital per individual share to what is the amount of the money that backs that share—in other words, to relate the nominal share capital to the actual net asset value of the share—we cannot see any reason why there should in those circumstances be a need for stamp duty to be paid. If this clause merely provided for the reduction or cancellation of share capital to be part of a scheme or arrangement as a result of which there was a change in shareholding or a change in control, one would have had no problem with it. If we look at this clause, however, we see, and I quote from line 55 on page 5, as follows—

And then it goes on to list a whole number of things—

1. (i) any shares in any other company are, with or without subscription, issued
   or to be issued to the person holding the first-mentioned shares at the time of cancellation or redemption thereof; or
2. (ii) such person receives or is to receive any cash or other asset from anybody

In other words, the term “anybody” can include the company itself, and it could well now be argued that where there is an ordinary reduction of share capital, this would now fall within the ambit of this provision.

I should first like to hear what the hon. the Deputy Minister’s reaction to this is. I should like to know whether he does intend to catch ordinary reductions of share capital in the net. If he does, we shall argue the principle of that with him. If he does not, however, I believe a very simple amendment to sub-paragraph (ii), on page 7, in line 23, would cover that situation. The effect of such amendment would be that the words “other than the company” would be added after the word “anybody”. That, to our mind, is a matter that should be dealt with.

I think that is reasonable.

The hon. the Minister of Transport Affairs believes that is reasonable. I thank him very much. I think he might well want to do it with one of his companies one of these days. [Interjections.]

The second point which I want to raise is the question of valuations which are carried out in terms of section 23(1) of the Act to which I have already referred, and also to what happens when there is only a partial cancellation or a partial redemption of shares. In terms of a new provision contained in this Bill, the whole matter is then in the discretion of the Secretary for Inland Revenue. That does not seem to us to be completely right, because there should really be a mathematical basis of determining what is the difference between the value of the share before the repayment of the capital and the value of the share after the repayment of the capital. If the hon. the Deputy Minister will look at the provisions of the Act as they stand at the present moment and look in particular at section 23(12A)(d) he will see that it provides there that it is to be—

I am reading from the principal Act because one has to read the second part of the proposed subsection (10) together with the principal Act where it is not being amended.

I should like to suggest to the hon. the Deputy Minister—it cannot be done by means of this Bill—that we should effect a change to subsection (12A)(d) of section 23 of the Act in order to give effect to a system in terms of which it should be done on a purely mathematical basis rather than that it should be left to a discretionary basis. To my mind that would be the better way of doing it.

For the rest we have no problems with the Bill. I have dealt with the matters to which we want to draw attention, and as I said right at the beginning, we shall support the Second Reading.

Mr. Speaker, the hon. member for Yeoville elaborated to a great extent at the end of his speech on the reduction in share capital and technical aspects in connection with which I am sure the hon. the Deputy Minister will reply to him. Without making a thorough study of the relevant provision I definitely do not feel that I am qualified to try to reply to the hon. member in this connection. I must tell the Director-General and his staff to whom the hon. member referred that I have great respect for their intelligence and the unique way in which they handle the affairs of the department, but to remain one up on people like the hon. member for Yeoville and others, particularly when it comes to the matter of tax evasion within the law, is, I think, a difficult matter. We thank the hon. member and his party for their support for the Bill.

I should like to agree with the hon. member for Yeoville that the period of six months for the payment of transfer duty is definitely a matter which presents problems from time to time. I do not think it really gives as many problems in periods of economic recession, as it does in periods in which there is an economic revival and work piles up at the Deeds Offices and in many other respects delays are also experienced at attorneys’ offices and elsewhere. In normal times or in times of less economic activity I feel he will agree with me that it is exceptional for anyone to need to wait longer than six months. That this aspect probably merits attention particularly as regards larger transactions, is something I must agree with.

In connection with the problem he raised regarding cinematographic tax and the benefits which should be added on for the public, we as representatives of the public sector would like to see this happen if at all possible. However, I think that the hon. the Deputy Minister has his reasons why this is not being done and particularly why it is not yet being done at present. One should like to hear what the hon. the Deputy Minister has to say about this.

As far as the Bill is concerned, I gladly support it. I want to furnish a few reasons as to why this measure may be supported with confidence.

Clause 1 concerns an exemption from marketable securities tax in connection with the purchase of marketable securities issued by the National Housing Commission, any university established by an Act of Parliament and any technikon established or deemed to have been established by, or declared to be such under an Act of Parliament. It would be interesting to hear what the exact explanation is for the wording in respect of the differentiation between a technikon and a university. It is not quite clear to me.

Clause 1(2) states that clause 1(1) is deemed to have come into operation on 1 April 1982. I am sure there are specific reasons for this. Quite possibly some of these institutions are already involved in such schemes. In terms of clause 7 a similar exemption is being made applicable to these institutions as regards stamp duty. The issuing and registration of transfer of any shares, stocks or debentures by any of the said bodies will therefore not be subject to stamp duty.

I do not think there can be any doubt in anyone’s mind that there is a tremendous need for housing in our country. This became clear in the discussion of the Vote of the hon. the Minister of Community Development. By means of this measure the Government is again demonstrating its determination to combat the problem at every possible level. This measure must also be seen as supplementary to clause 13 of the Income Tax Bill which must still come before this House and which makes provision for the development of specific housing projects. In terms of that Bill there are incentive measures encouraging persons to implement such projects. It is only logical that the National Housing Commission should be encouraged and enabled to obtain funds for housing and to be able to offer additional incentive savings and encouragement measures, as is being done in clause 1 and 7 of the Bill.

I am glad that the hon. the Minister is adding universities and technikons to the list of bodies and organizations exempted from marketable securities tax and stamp duty in terms of section 3 of the Marketable Securities Tax Act of 1948.

Our skilled manpower position makes it essential for the State to do everything reasonable and possible to facilitate the training and qualification of our highly skilled workers at institutions for higher education. The tax should also be seen as supplementary to clause 14 of the Income Tax Bill to which I referred earlier, which makes provision for the deduction of donations to universities, colleges and certain educational funds, which is an amendment to section 18A of the principal Act. While I am discussing our manpower needs—I am referring specifically to the shortage of highly skilled manpower—I want to ask the hon. the Minister whether he cannot consider making concessions to persons who are trying to improve their qualifications. Recently I came across several such cases in my constituency. There is, inter alia, a qualified chemist who is at present studying medicine. He is a married man and has considerable study expenses. In terms of the present taxation legislation he does not qualify for concessions in this connection.

In clause 4 of the Bill the National Parks Board of Trustees is exempted from the payment of stamp duty. I should like to refer to this clause. I am quoting—

These boards qualify for these specific measures and exemptions as set out in clause 4.

If one looks at the list of organizations and bodies mentioned in section 3 of the Marketable Securities Tax Act of 1948, as amended, and the organizations we are adding to it today by means of clause 1 of this Bill, namely, universities, technikons and the matter of housing, then the question arises: Why had the National Parks Board of Trustees not also been exempted from marketable securities tax? There is no doubt at all that the board has a great need for funds. If we look at the National Parks Board of Trustees annual report for the 1980-’81 financial year, we see that the capital account at present stands at R19 852 947, in comparison with the 1974-75 capital account of approximately R10 959 000. If one considers the requirements set out in the report for the specific financial year one sees that mention is made of the fact that there is still a great need for additional assets for all the departments of the Board for although all available funds are being utilized every year, this by no means satisfies the requirements. Investments of the board’s own funds in profitable trade and tourist facilities have thus far been very limited, owing to the improvement in existing housing and other aspects of the infrastructure. Virtually all the national parks have reserve potential to expand trade and tourist facilities. This not only enables the Board to increase its current income considerably in order to keep pace with the steadily rising trends in current expenditure, but also places it in a position to make more capital available for use in profitable projects.

Mr. Speaker, with all due respect I want to suggest that if there is no specific reason for not excluding the National Parks Board of Trustees and not from this exemption in marketable securities tax either, consideration should possibly be given to including them as well.

If one also looks at a Bill which will be discussed later in the session, namely the Environmental Conservation Bill, one sees that in clause 16 of that Bill the hon. the Minister of Environmental Conservation is empowered to declare the National Parks Board of Trustees a municipality for specific purposes. However, with all due respect I want to say that I think that that specific measure is not applicable to the hon. the Minister of Finance. I should appreciate it if the hon. the Minister would consider this, and if he would also see what can be done to allow this Board to qualify for the possible further allocation of funds. I should like to support this measure.

Mr. Speaker, in point of fact this Bill affects five other Bills. It is mainly of a technical nature. There is nothing controversial about it, and for this reason it is not necessary for me to spend the whole evening discussing it.

Accordingly, on behalf of the CP I should like to support the Bill. However, while I am speaking I should also like to thank the hon. the Minister and his department most sincerely on behalf of this side of the House for all the explanatory memorandums we have received in connection with all the financial legislation. As hon. members are aware, one cannot always make out from the Second Reading speech of the hon. the Minister what is involved, particularly when technical aspects are involved. However, these were set out very clearly and we want to thank the department and everyone involved for this. We support the Bill.

Mr. Speaker, I rise on behalf of the NRP to say that we shall also be supporting this Bill. As the hon. member for Sunnyside has said, it is really a technical Bill.

The hon. member for Roodepoort spoke at some length about the National Housing Commission. The one thing that I should like to say to the hon. the Deputy Minister is that we in these benches are very pleased to see that the hon. the Minister, the hon. the Deputy Minister and the department are examining all the various sections of our legislation to ensure that the Government does not tax itself, because we in these benches find it totally illogical that organizations such as quasi-state organizations which are to a large extent funded by public money should be taxed one way or the other. Therefore we welcome clauses 1, 4, 7 and 10, all of which involve exempting various organizations from having to pay marketable securities’ tax, stamp duty, transfer duty etc. We support that wholeheartedly.

I should just like to say to the hon. the Deputy Minister after listening to the hon. member for Roodepoort who spoke about the National Housing Commission which is a quasi State organization that I believe that our major problem in South Africa today is the provision of housing for all population groups. We who believe in the free enterprise system believe that the supply should meet the demand, but what has happened in recent decades in South Africa is that due to such legislation as the Rent Control Act etc. we have not been able to maintain the supply of houses in order to meet the demand. Therefore we in these benches will support any provision that will encourage the construction and provision of housing for renting purposes and especially for private home-ownership.

I want to make another appeal to the hon. the Deputy Minister. Some weeks ago during the debate on the Community Development vote, I spoke about the town-house village concept as a means of relieving the housing shortage. The hon. the Minister of Community Development is here tonight and he said in reply that there are utility companies doing this work. I have investigated this with the hon. member for Umbilo and I appreciate the tremendous job that these utility companies are doing. Nevertheless, I want to make another appeal to the hon. the Deputy Minister. We must use whatever ideas, facilities and talents we have to ensure that more and more houses are constructed in South Africa for all groups so that we can meet this demand. It is essential to the basic happiness of man to ensure that he, his wife and family have a decent house to live in. One of the clauses of the Bill exempts the Housing Commission from having to pay certain forms of taxation and we support that.

Clauses 2 and 3 deal with the changing of interest rates and we shall go along with that.

Clause 11 deals with the repeal of the cinematographic films tax and we go along with this. However, at this stage I want to say that I was most surprised to hear the hon. member for Yeoville take the line which he took on this clause earlier today.

Nothing surprises me about you.

The hon. member for Yeoville says that nothing surprises him about me. That is a typical Prog reaction. The hon. member for Yeoville took the opportunity to talk a lot of baloney in order to try to make a play for the Press and the public by making out that it is he who is fighting for the ordinary man. But what did he say? He said that he objected to this clause because it will result in R900 000 in tax which is now being collected by the hon. the Deputy Minister and his department remaining with the people who were previously paying this tax. He said that these people will now have a windfall of R900 000.

That is right.

The hon. member for Yeoville is the spokesman on finance for the official Opposition. I wonder whether the hon. member has any understanding of business. [Interjections.] The hon. the Deputy Minister has come to this House and what has he said? He has said that we have on our Statute Book a law which taxes cinematographic films. The hon. the Deputy Minister has also said that the cost of collecting R900 000 worth of tax exceeds the amount of money collected and it is therefore not worth collecting it.

He did not say that.

The hon. the Deputy Minister said the value of this source of revenue was declining and the administration involved was not worth collecting this amount of money. However, the hon. the Deputy Minister knows, as does the hon. member for Yeoville, that if these companies now have an extra R900 000 in profit as the member of Yeoville says, the hon. the Minister of Finance is going to collect company tax which is about 46,2% of that profit today, without any cost at all to the department.

This great businessman who is talking does not know that it is owned by one of the biggest life insurance companies in South Africa.

Be that as it may, the hon. member for Yeoville said that there would be an extra windfall of R900 000. [Interjections.] I want to say to the hon. member for Yeoville that any businessman today writes into his cost structure and into his prices the fact that he has to pay tax, and the fact that these people, whoever they may be, will now have an extra R900 000 may assist them.

That is peanuts!

The hon. member says it is peanuts.

To you it is peanuts.

It may assist them in fighting the inflationary spiral of their costs, and I am therefore most surprised that the hon. member for Yeoville should have taken this particular line.

The hon. the Deputy Minister has already told us that the whole purpose of clause 6 is to close the loopholes that exist at the present time and which allow the private sector, especially those dealing in big finance and company take-overs etc. to avoid paying stamp duty, transfer duty and so on. I want to say to the hon. the Deputy Minister that I agree that there is a battle of wits between the taxman and the man who is earning the money. [Interjections.] This is going to continue; it is part of life, as I am sure that the hon. the Deputy Minister will concede. However, the point that I want to make to the hon. the Deputy Minister is this. What is this so-called battle costing the country at the present time. Many companies and also many people employ accountants and lawyers to find loopholes in the law and to discover tax dodges so that they can avoid paying tax, and here we have legislation before us tonight that is closing some of those loopholes. This brings to mind an article I read not so long ago—and I have already mentioned this to the hon. the Minister of Finance in a previous debate—in which Milton Friedman says that if they lowered the upper levels of the marginal rate of tax to a certain level in the United States, the incentives that presently exist to avoid paying tax by employing the services of accountants and lawyers to find tax dodges or loopholes, would disappear, and people would be prepared to pay the lower and more reasonable rate of tax. This would not only bring more people into the tax net, but would also release great numbers of professional people to be employed in more productive pursuits. I put it to the hon. the Deputy Minister that possibly he should conduct a cost-benefit study of all our systems of collecting tax as he has done with the cinematographic films tax, to see whether the State is really reaping the rewards that it should. Perhaps the bureaucracy that we find in social democratic States such as the hon. member for Yeoville would like to support, is costing a very high proportion of the money that is being collected. I should therefore like to see the hon. the Deputy Minister review all taxation legislation on a cost-benefit or cost-effective basis so as to ensure that we are not spending too high a Proportion of our taxpayers’ money in just feeding the bureaucracy that is acting as a sort of parasite in our economy. Having said that, we in these benches welcome the provisions of this Bill and shall be supporting it.

Mr. Speaker, the hon. the Deputy Minister of Finance must be feeling very happy about this legislation he submitted to this House. There was a greater deal of cross-fire, but none of it was aimed at him. Actually the fighting was between the hon. member for Yeoville and the hon. member for Amanzimtoti. Usually it is the hon. the Minister who has to face the cross-fire. When I began to read through the legislation I noted that in clause 2, right at the beginning of the legislation, it is proposed that taxes be reduced. I was most delighted by the fact that the hon. the Deputy Minister also aproved of taxes being reduced, thereby contributing towards lowering the cost of living. It is true that the figure mentioned was only about 16%, but at least that is the extent of the rise in the cost of living in this year. I decided we had a good Deputy Minister. When I went on to read the next clause, and I noted that he was increasing taxes again by 33⅓%. I then had a less favourable opinion of the hon. the Deputy Minister. [Interjections.]

You are just like Harry.

Since I am now being accused of falling into the same category as the hon. member for Yeoville—a category I should like to avoid—I must say that I do not agree either with him or the hon. member for Roodepoort. I do not think the period for the payment of transfer duty should be longer than six months. The hon. member for Yeoville motivated his proposal by referring to the purchaser and payment system, but in the payment of transfer duty I do not think that the State should grant more than six months’ extension of time. This period has been fixed for years. I think everyone knows it is six months. I also think it is a reasonable period, and I do not think it is necessary that a longer period be granted.

However, in another respect I agree with the hon. member for Yeoville. I refer to what he called “the battle of wits” when he referred to clause 6. When I look at clause 6 it seems to me, too, that in respect of companies in which there was a reduction in capital, taxes are again being levied under certain circumstances. However, this sounds reasonable to me, because after all, stamp duties have already been paid. If, then, there is a reduction in capital, why must tax be paid on that reduction? As I have said, tax has already been paid, and it seems to me that this will merely involve a duplication of stamp duty. However, that is how I understand the clause. I must say that this is probably one of the longest clauses without a fullstop I have ever encountered in legislation.

This brings me to clause 10. The purpose of this clause is, of course, merely to ensure that no transfer duty or tax duty is paid on amounts passing to the Small Business Development Corporation. I think this is an essential provision and I thank the hon. the Minister for the fact that this legislation could come before this House this evening.

Mr. Speaker, I want to refer to the remark made by the hon. member for Roodepoort that the hon. member for Yeoville “belasting ontwyk”. I disagree with the hon. member for Roodepoort because he is accusing the hon. member for Yeoville of committing criminal acts. There is nothing to prevent one from avoiding taxation, but under no circumstances can one evade taxation. There is a big difference between “voorkom” and “ontwyk”.

*The hon. member said that the hon. member for Yeoville knew how to evade the law.

†I also want to refer to the speech made by the hon. member for Amanzimtoti. The only resemblance I could find between his speech and cinematography was that his speech was completely negative.

I was rather pleased that the hon. member for Port Elizabeth North saw his way clear to support the hon. member for Yeoville regarding the fact that reduction of capital should not be included in the Stamp Duties Act.

I should like to mention that the amendment proposed to section 23 of the Stamp Duties Act by clause 6(1) of the Revenue Laws Amendment Bill is designed to counter substantial abuse with regard to stamp duty on share transactions. The amendment therefore deserves unequivocal support. Clause 5(1) of the Bill, however, places the burden of the liability for payment of stamp duty in this case on the company of which the shares are cancelled or redeemed. I suggest that the liability be placed on the party who acquires the shares in the company or who effectively has increased his shareholding in a company as a result of having this procedure adopted. If the company were to be liable, it would mean that shareholders in the company who have not been a party to this transaction and have not benefited by it will be prejudiced to the extent of their shareholding in the company as the company will be bearing an expense which should rightly be borne only by the parties to the transaction. This is in accordance with the normal liability for stamp duty on a straightforward purchase of shares where the person liable for stamp duty is the purchaser. He is the one who has abused the fiscus and he should still be responsible for paying the stamp duty. I trust that the hon. the Minister will see his way clear to rectify what is in effect an injustice on the minority shareholders.

Mr. Speaker, I want to thank the hon. members for supporting this Bill. I agree with the hon. member for Yeoville that the Commissioner of Inland Revenue and his staff really enjoy a battle of wits as far as legitimate tax avoidance is concerned. I also agree with him that illegitimate avoidance or tax evasion should be stamped out. I think we must not mix up the two terms. The hon. member for Bezuidenhout pointed out that tax avoidance and tax evasion are basically two different approaches.

The hon. member for Yeoville also referred to the fact that the National Housing Commission now has borrowing powers. This only proves that this Government is a very effective one, because last year this time the National Housing Commission had no borrowing powers. Now it has that power by law and it even falls under the Marketable Securities Tax Act, enjoying the necessary tax exemption, the necessary exemption from stamp duty, etc.

How long has this Government been in power?

This is proof of an effective, an efficient and a good department and also a very good Government.

One of the clauses the hon. member referred to is clause 2 in terms of which we are reducing the interest rate from 12% to 10% in the Marketable Securities Tax Act. The hon. member objected to that and said it was very much lower than the market-related or overdraft rates. He therefore objected to the reduction thereof from 12% to 10%. If I remember correctly, the hon. member also said that the shareholder would have to pay this penalty.

I referred to the share dealer.

I see. The hon. member says he referred to the share dealer. He nevertheless objected to the increase from 7,5% to 10%. The hon. member should tell us now what he really wants. In the first instance he objected to a reduction of the interest rate, stating that it was very much lower than the market-related interest rate or the bank overdraft rate. Dealing with the increased rate in clause 3, the hon. member said we should not increase it. The hon. member should therefore tell us what he really wants. It seems as though he wants to have his cake and eat it. [Interjections.]

I am prepared to bargain with the hon. member. When he discussed clause 3 he also added that the six-month period was too short, and suggested that it should be increased to 12 months. I am prepared though to bargain with the hon. member. If he should be prepared to move an amendment suggesting an increase of the penalty rate in order to bring it into line with the market-related interest rate, I undertake to consider increasing the six-month period to 12 months. [Interjections.] Referring to clause 2 the hon. member argued that the 12% should not be reduced to 10% because it was so much lower than the overdraft rate. I am prepared to consider an amendment, which I hope the hon. member for Yeoville will move, seeking to increase the 10% to 20%, in return for which I am prepared to bring about an amendment to increase the period of six months to 12 months. [Interjections.] I am really of the opinion that the 10% to which the hon. member for Yeoville referred, is not excessive. An increase from 7,5% to 10%, I believe, is not excessive at all. The hon. member said it was much lower than the current overdraft rates. If anybody therefore should defer his payments for a period of six months—which is penalty free—it could be quite a viable exercise, particularly if he should invest that money at a rate of 20%, using it after six months to pay his deferred tax without paying any interest on it, and of course also no penalty. It could then become quite a viable business. Now the hon. member says we should extend this period to 12 months. It seems as though he wants to make it even more viable for people to defer the payment of duties. I am afraid we cannot do that.

The hon. member also referred to cinematographic tax. We have had a very close look at this tax. At one stage I even proposed that it should be increased. The reason why I felt it should be increased was because the film industry in South Africa was financially in desperate trouble. We thought that by collecting certain taxes from the cinema industry we would be able to subsidize the film industry. After very lengthy in-depth discussions with people from both the cinema and the film industries, however, we decided not to increase that tax. The hon. member for Yeoville, however, made a big political spiel out of this again by alleging that nothing was passed on to the consumer. I think the hon. member for Amanzimtoti also dealt with that. We should bear in mind though that that tax amounts to only 3 cents per cinema ticket.

*If those three cents per ticket are now to be passed on in some way or another then I simply do not know how it is going to be possible to accomplish this in practice. However, there is another very important factor in this regard. The film industry in South Africa is experiencing serious financial problems. If the hon. member listened to my Second Reading speech he would have heard me say that the revenue we derive from these three cents per ticket was decreasing. So the film industry is facing serious revenue problems at the moment. I believe I am correct in making this statement and that most of the film businesses will support me in saying this. Consequently the administrative burden of collecting it no longer justifies the money we receive for it. That is the first point. Secondly, I think that the three cents per ticket are at least a boost for the industry, because their revenue is also decreasing as a result of the tremendous competition they are getting from television. This boost should help them to counteract that competition to a certain extent so that, particularly in the smaller theatres as well the industry may enjoy a slight advantage. I think the hon. member for Malmesbury has already dealt with this point very fully.

†In so far as clause 6 is concerned the hon. members wanted to know whether the Minister intends catching all reductions.

Is it the intention?

No, the answer is a definite “No’. We do not intend catching them all. The hon. member for Yeoville suggested an amendment in this regard, and if he should move it, we would accept it.

In so far as clause 7 is concerned the hon. member for Yeoville referred to a mathematical basis which should be introduced for the purpose of evaluation in terms of section 23(12A)(d) of the principal Act. That particular subsection has been in existence for a very, very long time without its giving rise to any particular problem. The hon. member’s suggestion, however, falls outside the ambit of the Bill, but if a sensible and acceptable suggestion is laid before the commission during the recess to bring about a new method of evaluating on a mathematical basis, it will definitely be considered.

*I should like to thank the hon. member for Roodepoort sincerely for his contribution and support. He asked a specific question about clause 1 when he wanted to know why, in that case, the date was 1 April 1982 while, in the case of other clauses it was 1 July 1982. The reason for this is that there is a specific technicon which has already issued securities to the market. We should like to cover that case in terms of clause 1.

The hon. member also spoke at length about the Natal Parks, Game and Fish Preservation Board and the National Parks Board of Trustees, to which reference is made in clause 4. He also asked why these boards could not also enjoy exemption in terms of clause 2 which deals with marketable securities. The only reason I can give the hon. member in this regard is that these boards do not issue marketable securities. The boards have no authorization to issue marketable securities. The position would of course be different if the boards could in fact obtain such authorization. In his speech the hon. member pointed out consideration is being given to declaring such a board a municipality or local authority. If it were declared a local authority by means of legislation it would most probably automatically fall under that clause since it would then be an extension of the State machine. I hope I have given the hon. member an adequate reply. It cannot qualify, then, because, it is not empowered to issue Government securities.

I want to thank the hon. member for Sunnyside for his support for this Bill.

†I think I have replied to most of the points raised by the hon. member for Amanzimtoti, especially as far as cinematographic tax is concerned. I agree with the points he raised in connection with national housing. I wish to assure the hon. member that the Steyn Committee is looking into all possibilities to build as many houses as fast as possible at the lower possible price. This is our motto. I thank the hon. member for his support.

As far as tax collection is concerned, we are also looking at all possible means to simplify and modernize tax collection system and to make it as cheap and easy as possible. I can give the hon. member this assurance in this regard.

Question agreed to.

Bill read a Second Time.

Mr. Chairman, I want to come back to the question of the difference between the penalty which is paid in respect of the Marketable Securities tax Act and the penalty under clause 3 which is paid in terms of the Transfer Duty Act. The hon. the Deputy Minister apparently did not appreciate it, and the hon. member for Amanzimtoti did not want to appreciate it, but let me sy again that the essential difference is that there are two transactions which are of a different nature in the social structure. On the one hand the question of home ownership is related to transfer duty, and therefore in relation to the question of the transfer of houses this Government itself has shown that it wants to encourage the ownership of houses by the individual, particularly in the lower-income groups, and it has in fact changed the transfer duty repeatedly because of that. To my mind there is a fundamental difference between the transfer of a house and the transfer of a share in respect of a transaction on which marketable securities tax is payable. Therefore to seek to compare the two and to say that they should be on the same level in respect of interest, is to my mind trying to compare apples and pears, and that one cannot do. What is happening at the present moment is that there is a very substantial difference between these two for, to my mind, social reasons. In the case of transfer duty it is presently 7½% and in the case of marketable securities it is presently 12%. There is therefore a difference of 4½% between the two, something which the legislature, and this Government, have seen fit for years to allow to exist. Now, all of a sudden, they say the two things have to be the same. The issue therefore is: Are they the same social concept? If the hon. the Deputy Minister or the hon. member for Amanzimtoti—he is the great Friedman capitalist in the House—say these are the same social concepts, then I should like it on record in Hansard.

If they say that this is the same social concept, then I should like it on record in Hansard because it is not the same social concept. There are fundamental differences.

Why do you not move an amendment?

I am trying to find out from the hon. the Deputy Minister why he wants to have this difference disclosed. The difficulty is that the hon. the Deputy Minister knows that all I could do is to vote against the figure of 10%. I am powerless to move other financial amendments. They can only come from the Government side. I want him to explain whether he is of the opinion that there is no social difference between an ordinary man buying a house and somebody else who speculates in shares. That is the test and that is the question I want him to answer.

Mr. Chairman, the hon. member for Yeoville is putting words in my mouth. I definitely never said any such thing. The hon. member is being wilful. After all, there is a tremendous difference between the two clauses.

Why?

I shall come back to that. Surely the State must also collect its revenue. After all, this is not a tax measure, but a penal provision. If the person, organization or body does not meet its obligations to the State, it is punished. Surely it is unfair to suggest that the State is all of a sudden acting in a manner prejudicial to home-ownership by increasing this interest rate from 7,5% to 10%. As the hon. member for Amanzimtoti said, that is really absolute nonsense. However, there is also another basic difference. This 10% interest only comes into effect after six months. A person can keep this levy interest-free for six months. I made the point that these people can invest that deferred tax in the banks for six months at high interest rates. They can therefore make money out of it. Surely, then, it is unfair and untrue to state that the Government is discriminating against homeowners in this clause. This is absolutely untrue. On the contrary, the person is afforded an advantage, because he can keep the levy and fine interest-free for six months. How could we be more accommodating? Surely the hon. member knows he is wrong. However, he is now trying to make petty politics out of this.

However, there is also another basic difference. In the Income Tax Act there are a series of penalty provisions involving interest rates of between 4% and 12%. The aim is now to relieve the administrative burden by making these various interest rates uniform at 10%. This is an attempt at rationalization on our part to make administration as easy as possible for our people and for our staff.

Mr. Chairman, I do not know what has happened to the hon. member for Yeoville tonight. If he is prepared to read my Hansard he will see that I did not even discuss these provisions during my Second Reading speech. I do not know why he got so hot under the collar tonight and accused me of doing all sorts of things. The hon. the Deputy Minister said that he is playing at petty politics to-night, and I am inclined to agree, that this is the case. I challenge him to read my Second Reading speech in Hansard to see whether I raised this matter. I can assure him that I did not.

Clause agreed to.

Clause 3:

Mr. Chairman, in the light of what has been said since the beginning of the debate I now move the following amendment—

Mr. Chairman, on second thoughts I am not prepared to accept that amendment. [Interjections.]

Amendment negatived (Official Opposition dissenting).

Clause agreed to.

Clause 5:

Mr. Chairman, I raised a perfectly legitimate point with the hon. the Deputy Minister in which I said that minority shareholders are going to be penalized where a majority takes over the shares and the company has to pay stamp duty. I think it is being grossly unfair to minority shareholders if they have to suffer as a result of this. Therefore I should like to have a reply from the hon. the Deputy Minister.

Mr. Chairman, when one looks at clause 5 one sees that no change is being effected except that we include the matter of redemption.

Clauses 5 and 6 must be taken together.

We are talking about clause 5 now. We are not talking about clause 6. As far as clause 5 is concerned, there is no question of change as far as that is concerned. We are only introducing a redemption.

Reference should be made to clause 6(1) as well.

Clause agreed to.

Clause 6:

Mr. Chairman, I wish to move the following amendment—

This is the amendment which the hon. the Deputy Minister said he would accept. I do not know whether or not he is having second thoughts or not bearing in mind the other debates but I shall wait to see whether he has second thoughts before I debate this clause further.

Mr. Chairman, on first thoughts I am prepared to accept that amendment.

Mr. Chairman, I should now like to have a reply from the hon. the Deputy Minister with regard to the point I raised a few moments ago as it is pertinent to Clause 6.

Mr. Chairman, the hon. member referred to stamp duty avoidance and the liability for the duty under section 23(10) which is placed on the company concerned. The hon. member for Bezuidenhout says that the person acquiring the interest in the shares of the company should pay the duty. Is that correct?

Yes.

This may be a good idea in theory, but looking at the practicalities one sees that those schemes are not possible without at least a resolution of the company concerned. Does the hon. member agree with that? I say that it is not possible without a resolution of the company concerned, i.e. of the majority shareholders. If a burden is placed on the minority shareholders, that is surely something that should be settled by the members of the company. Does the hon. member agree with that? The company is very much concerned in the matter and it is therefore logical to impose the duty on the company which is perfectly free to recover the amount involved from the shareholders concerned if an appropriate resolution has been taken.

Mr. Chairman, may I first of all thank the hon. the Deputy Minister for accepting my amendment because it does solve the problem. I am appreciative of the fact that he has done so and therefore I do not need to debate that point further.

I should also like to draw attention to an aspect which arises from what the hon. member for Bezuidenhout has said. The Companies Act actually provides that no company shall render any financial assistance in connection with the acquisition of any shares. That is a provision which has been in the old Act for ages. What actually happens here is that with this kind of situation one actually has financial assistance rendered in respect of the acquisition of an interest in the company because by law the company is obliged to pay the duty. The problem is that one cannot actually pass a resolution in order to pass that liability on to somebody else, because one cannot pass a liability to somebody …

You take the responsibility on yourself.

The difficulty is that the company itself will then have an accounting problem in respect of this. I recognize that there are practical difficulties in regard to the recovery of the duty from the point of view of the fiscus. I recognize that as a reality, because if one reduces the share capital and somebody does not have a transfer of the shares, then in fact one does not have a share on which one could say that one wants to impose the tax. I clearly see that there is a practical difficulty, but I should like to suggest to the hon. the Deputy Minister that during the recess we should actually review this provision, because we cannot alter it here as it is not part of the Bill before us. I think we should consider it with a view to making a provision that when this does take place, the company shall be entitled to recover it from certain specified persons. I think it will solve the problem if we do that.

Mr. Chairman, I am prepared to accept the hon. member’s suggestion.

I thank the hon. the Deputy Minister.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 7:

Mr. Chairman, I move the amendment printed in my name on the Order Paper, as follows—

Amendment agreed to.

Clause, as amended, agreed to.

Clause 11:

Mr. Chairman, I should like to come back to this tax that is payable in regard to cinemas. In the first place this has nothing to do with the filmmaking industry at all.

I know that.

Then why bring it into it? There is a second aspect that in my view is important, and I think it is necessary to point it out to the hon. member for Amanzimtoti. The provisions of section 2 of the Act in fact makes it clear that this tax is payable in respect of every person who attends an exhibition of a film.

Three cents per ticket.

I am coming to the 3 cents per ticket too. Firstly, this tax is payable in respect of every person who attends an exhibition of a film. Secondly, the hon. the Deputy Minister refers to the 3 cents per ticket, but he neglects to take account of the fact that this tax has been in existence for over 30 or 40 years. The schedule actually states that where the admission charge excluding the tax exceeds three shillings, the rate of tax is threepence. This tax has remained at that figure because the legislation has not taken account of inflation. In those days we used to pay low admission fees to go to a cimema, but that is not the case today. The reality is—and this is where the test is, and where the difference between us lies—that here we are abolishing a tax on what is, in fact, a luxury. If we were to abolish this tax and allowed the benefit to be passed on to the people who attend a cinema—and section 2 makes it clear that it is related to attending cinema shows—then there would be sense in this provision. However, at the same time as we are abolishing a tax on a luxury and it is not being passed on to the consumer in other respects—and we are going to debate that in a moment—we are actually going to impose tax on essentials, and that is where the fundamental difference is between us. It is no use quoting Milton Friedman or anybody else. The reality is that there is a fundamental difference of approach; a fundamental difference in respect of which we are not ashamed to state our case. Our case is simply that if a tax, related to the attendance of individuals—being clearly related to what they pay—is abolished and this is not passed on to the consumer, we are entitled to protest. We therefore intend to vote against this clause.

Clause agreed to (Official Opposition dissenting).

House Resumed:

Bill, as amended, reported.

Bill read a Third Time.

Mr. Speaker, I move—

A full explanatory memorandum has been prepared for the information of hon. members in regard to the Second Sales Tax Amendment Bill and the Revenue Laws Amendment Bill, and part A of that memorandum deals with the Second Sales Tax Amendment Bill now before this House.

Essentially there are three important features of the Bill upon which I shall lay emphasis. The first is the introduction, by clause 1(a) of the Bill, of a definition of “qualifying rental consideration”, which must be read in conjunction with the proposed amendments in clauses 2(e), (f), (g), (i) and (j) of the Bill.

Hon. members will recall that section 6(1) of the principal Act, the Sales Tax Act, 1978, makes provision for certain exemptions from sales tax, and amongst them there are exemptions from sales tax in respect of— a registered vendor who intends letting the goods or leased property to users in the Republic in the course of any rental enterprise carried on by that vendor.

1. (a) the sale of goods to,
2. (b) leased property, consisting of movable goods, delivered under a financial lease to,
3. (c) goods imported into the Republic by, and
4. (d) goods which are as contemplated in section 5(l)(h) of the Act applied by,

In an attempt to close a loophole in the law and to counteract avoidance of sales tax where rental enterprises were able to purchase, free of tax, goods intended to be let at mere nominal rentals, an amendment to the law was introduced last year whereby rental enterprises were required to conform with a rule—which, for the sake of brevity, can be referred to as the “12 months/10% rule”—before being able to avail themselves of the tax-free purchase of goods intended to be let by such enterprises. However, because of the way in which that rule was interpreted, some doubt arose as to the date from which the first interval of 12 months had to be calculated, especially where a rental agreement was framed on the basis that the first rental consideration became payable some two or even three years after the commencement of the agreement, and only thereafter within regular intervals not exceeding 12 months.

The introduction of a definition of a “qualifying rental consideration” is therefore intended to clarify the law and make it quite clear that in order to qualify for the relevant exemptions to which I have referred, rental enterprises must let the goods or leased property to users in the Republic at a qualifying rental consideration as circumscribed in the new definition of that expression as introduced by clause 1(a) of the Bill.

*The second important feature of this Bill is the amendment proposed in clause 2(a). In terms of the provisions of section 6(l)(b)(i) of the principal Act, provision is made for an exemption from sales tax in respect of the sale to a registered vendor of goods intended for retail as such by him in the course of any enterprise in respect of which he is registered but excluding a resale of certain goods in respect of which there are exemptions in other provisions of the principal Act.

Except where expressly provided in relation to certain enterprises mentioned in certain Divisions of schedule 2 to the principal Act—for example manufacturing, farming and fishing enterprises—section 6(1) of the principal Act contains no general exemption in respect of the sale to any registered vendor of goods in the form of containers, packaging or wrapping materials which are not intended for resale as such but intended for incidental use in connection with the sale by that vendor of other goods in the course of carrying on the enterprise in respect of which he is registered.

The proposed amendment effected by clause 2(a) of the Bill is merely intended to clarify the provisions of the law as applied in practice from the inception of the Act viz. that the provisions of the exemption contained in section 6(l)(b)(i) of the principal Act shall not apply in respect of—

1. (a) the sale to any registered vendor of goods in the form of containers or packaging or wrapping materials intended for use in connection with the sale by him or other goods in carrying on the enterprise in respect of which he is registered; or
2. (b) the sale to such vendor who is registered in respect of any accommodation, hotel or catering enterprise of goods in the form of eating, drinking or carrying utensils or articles or serviettes intended for resale as adjuncts to the supply of any prepared food or beverage.

Hon. members will realize at once that the granting of exemptions to sales tax with regard to certain inputs is always a delicate matter, particularly since the Treasury has to guard against the erosion of the tax basis. That is why in principle, exemptions in respect of certain inputs can only be considered when the levying of sales tax on these inputs would result in a significant increase in the tax scale for the end-user. Where there is convincing evidence that such an increase does occur in any specific instance, Internal Revenue and I will give the matter due consideration with a view to including the input at issue in the schedules of qualifying inputs so that it may be purchased free from tax by the registered entrepreneurs in question.

†Mr. Speaker, the third important feature of the Bill is the proposal to deem any advertising or publicity service to be a taxable service for the purpose of sales tax. I refer here to clause 8(1) of the Bill.

Hon. members will recall that in his budget speech delivered in the House during this session, the hon. the Minister of Finance said—

The Commissioner for Inland Revenue has held discussions with a comprehensive cross-section of persons who are representatives of the advertising industry and media, and such discussions have served to indicate that the advertising industry is a highly complex one. Further discussions remain to be held in order to iron out practical difficulties which are peculiar to the industry, before the implementation of the measure. It is for that reason that it is proposed that the amendments to the law, as proposed by clauses 8(1) and 9(l)(c), relating to advertising or publicity services, should come into operation on a date fixed by the Minister of Finance by notice in the Gazette instead of 1 August 1982 as originally announced by the hon. the Minister in his Budget speech. This will allow time during the recess to hold the further discussions to which I have referred.

The attention of hon. members is drawn to the fact that in terms of the provisions of section 49(l)(b) of the principal Act, the Minister of Finance is empowered to amend the Schedules to the Act when Parliament is not in session by notice in the Gazette; hence any matters relating to advertising or publicity services which are not covered by the proposed amendments in the Bill but which may arise as a result of the further discussions which it is proposed to hold with the advertising industry and media, can be incorporated in the relevant Schedules to the Act by the Minister of Finance by notice in the Gazette.

*In terms of the provisions of section 49(1)(a) of the principal Act, the Minister of Finance is empowered, when Parliament is not in session, to increase or reduce the tax scale from time to time by notice in the Gazette, provided that the scale as fixed in terms of section 5(1) of the Act is not changed to provide for an increase of more than 2% in the tax scale thus fixed.

Hon. members will recall that due to the drop in the gold price and the deterioration in the world economy, the Minister of Finance was compelled prior to the Budget to announce an increase in the scale of sales tax from 4% to 5%, taking effect from 1 March 1982.

As far as sales tax is concerned, it goes without saying that with every change in the tax scale, adequate time must be set aside to enable both Internal Revenue and entrepreneurs to implement the new tax scale. Accordingly the new section 49A, as inserted in the principal Act by clause 7 of the Bill, seeks to empower the Minister, when Parliament is in session, to act upon—

1. (a) any proposal tabled in Parliament for an increase in the rate of sales tax; or
2. (b) any proposal by the Minister for a decrease in the rate of sales tax, so as to give to any such proposal the force of law until the promulgation of an Act passed by Parliament during that session giving effect to the proposal, or until other provision is made.

As sales tax affects virtually every person in this country, it is desirable that the general public be informed of any change in the rate of sales tax by means of a notice in the Gazette.

A full explanation of the other amendments to the principal Act as embodied in the other clauses of this Bill is provided in the Explanatory Memorandum.

Mr. Speaker, I think the hon. the Deputy Minister is aware of our attitude towards sales tax and, in particular, that he is aware of our attitude towards the application of that tax to certain goods, in particular basic foodstuffs. Therefore I move as an amendment—

This year we have already had an increase in sales tax and we are experiencing a continuous increase in the prices of goods during the current year. The current inflation rate in fact is extremely high, much higher than that in most Western countries. While on the one hand prices go up and therefore the amount collected by the fiscus goes up, on the other hand the rate of tax in fact is going up. The combination of these two aspects therefore constitutes a new kind of fiscal drag, and in order to distinguish it, I think we should rather call it a new kind of fiscal grab be cause the reality is that more and more is being taken by the fiscus by means of this method of taxation.

We have taken the attitude throughout and we take the opportunity on every occasion when it is possible to debate this issue, to point out that in our view the poorest people in the land are hit hardest by this tax, that those in the lower income groups, in fact, pay a greater proportion of their income in respect of goods on which the tax is levied, that we believe that the essentials of life should not be subject to this tax and in particular we single out that basic foodstuffs should not be subject to this tax.

We were told at the time of the introduction of the budget that there were certain subsidies, but if one bears in mind the price increases that have already taken place and the price increases that still are to take place, it is quite obvious to one that the subsidies on basic foodstuffs are wholly inadequate in order to take this pressure off the lower income groups of our community. When the champions of free enterprise and capitalism speak here, then they should also speak and tell us that in fact there is no market mechanism that works in South Africa in respect of agricultural products, because here the market mechanisms are completely excluded and the consumer therefore has to pay the price. Therefore we move this amendment and seek this undertaking from the Government.

I now turn specifically to the provisions of the Bill. Firstly I want to say that the provision which relates to the closing of the loophole in respect of leasing is to be welcomed because I think that was an obvious way of overcoming a problem, and therefore one supports the concept of that having been changed.

Secondly, I want to deal with the amendment which I have already indicated I intend moving. In this regard I refer to clause 6 which deals with construction agreements in respect of which there are two points I should like to raise. The first is that the right to recover an increase in tax or to have an obligation to make a refund is obviously an equitable one. The provision, however, appears to interfere in the contractual rights of the parties concerned in that the State, by this provision, is in fact contracting for the parties. The parties themselves may have made a particular provision in respect of this matter, which they prefer and in terms of which one or other of the parties is prepared to take the risk of a decrease or increase in so far as general sales tax is concerned.

We believe that where the parties themselves have contracted and the agreement specifically provides as to what is to happen when there is an increase or decrease in tax, those contractual provisions should apply. We believe that only where parties have not contracted for themselves the statutory provisions apply. For that reason we propose to move two amendments copies of which have already been furnished to the people concerned so that they know what they are. I shall move the amendments in the Committee Stage.

Thirdly, I want to refer to clause 7 which deals with the powers of the Minister. As I said earlier today, it is quite clear that one of the major features that gives Parliament control over the executive is its power over the appropriation of funds and over the raising of taxes. We on these benches have the particular worry that with a new constitution now pending the only real control that there will be over the executive will be control in respect of the raising of taxes and the appropriation of money. If in this case we have a position where once again the Minister has the power to raise taxes without first having to get the approval of Parliament, then Parliament will be surrendering another of the powers which are so important to it. What is also important, is that in regard to this tax it is not possible to say that it should be refunded if Parliament should decide that it does not approve of the Minister’s proposal. If the tax is refunded it goes back to the people who have in turn already collected it from someone to whom they cannot really pass it on. The danger of this occurring is something which we are extremely worried about and so we are, to say the least, very unhappy about the provisions of clause 7, as we were about the provisions of section 49 of the original statute.

I now want to deal with the question of advertising and publicity services. Let me say immediately that it is far more logical to tax these than to tax food.

That is why we are taxing them.

I would much rather advertising be taxed than food. [Interjections.] I would like to make a change with the hon. the Deputy Minister. The hon. the Minister must tax advertising and give us untaxed food. I think that would be a very fair deal in the circumstances.

The question I want to ask the hon. the Deputy Minister is a more important one than one merely relating to advertising or publicity services: What is the principle which he and the Government intend to apply in future in regard to the taxation of services? In other words, is it the intention of the Government to extend in the future the application of general sales tax to other services? Let me give the hon. the Minister an example. In the United Kingdom, for instance, a solicitor—an attorney as we would call him here—has to pay VAT on fees which he charges. This is so because it is a service and in Britain services are taxed generally. Will all services of any kind which are rendered to the public for profit eventually be subject to taxation? Where some services are already being taxed and if this principle is going to be extended gradually, then we should like to know what the principle is which is at stake. I think that is a very important question which should be answered.

A further question that needs to be answered relates to the degree of double taxation that arises from the taxation of services and which may well arise in respect of the taxation of these particular services. It may be argued that the degree of double taxation is relatively small, but any degree of double taxation is an undesirable situation. That appears to be accepted because in another provision of the Bill—I think it is clause 2(b)—we are trying to do away with a degree of double taxation. So, I ask: What is going to be done in order to avoid double taxation in respect of this particular aspect of it, particularly in regard to services and advertising and publicity services generally? There is another question that arises and in this regard I want to refer the hon. the Deputy Minister to clause 8 on page 18 where it says—

That particular phrase—”the public or a section thereof’—has received attention in the courts where it has been contained in other statutes. What is really intended should be covered by this? Let me give the hon. the Deputy Minister an example. If you employ a public relations firm whose activities are to be directed either towards an individual firm—let us assume that you want to obtain a contract or certain business or get a certain view across to a major corporation, in other words, one entity—or towards a specific group of people who in law are not regarded as being either the public or a section of the public, will that not be taxable? There are many instances in this regard relating to prospectuses where the issue has been interpreted by the courts as an invitation to the public and there are other cases dealing with only a section of the public.

It seems at the present moment—and I would like the hon. the Deputy Minister to react to this—that a public relations service or even an advertising activity which is not designed to hit the public but merely designed to hit a section of the public, is not taxable. In other words, if there was a mailing list which was limited to a particular group of people who could not be described as a section of the public, that service would not be taxable. We all know that there are some businesses which specialize in this very thing where attention is directed to a particular segment of the population. Take another example. There is a publishing house in regard to which I suffer from receiving numerous copies of their propaganda or publicity material, whatever you wish to call it, because I find myself in a specific mailing list. If it chooses to address a letter to, say, to every member of Parliament inviting him to buy a specific book or subscribe for a particular thing, that would not be taxable in terms of the particular provisions of the law. I wonder whether that is really the intention because, if one is going to tax publicity services for public relations services of this nature, it seems to me that one should cast one’s net a little wider. It does seem as if we are allowing some people to escape the tax while other people who operate on a broader basis have to pay it.

In regard to clause 9, I have a problem with some of the items referred to in this clause because, as I see it—the hon. the Deputy Minister dealt with this himself—it is difficult to determine whether to exempt something or not. It is not an easy matter. Why, for example, are boring machines and grit for the shipbuilding industry to be exempted? There must be some particular reason why they are being exempted. I am sure there must be at least one person in this House, who for the moment I will not name, who may be happy that airbags are now to be exempted. Perhaps we can work out who that member is and why his airbag is being exempted. Taking the Bill as a whole, we regret that in these circumstances, although we do want the loopholes closed, we have to record out protest in respect of the application of sales tax. We only wish that the hon. the Deputy Minister would give us the undertaking in regard to basic foodstuffs, because that is something that we feel very strongly about. Therefore we shall vote for our amendment in the Second Reading.

Mr. Speaker, we on this side of the House cannot support the amendment moved by the hon. member for Yeoville. I think the hon. the Deputy Minister will reply in full to the allegations he made.

The hon. the Deputy Minister singled out the three most important aspects of the Bill at present before this House, and I think that these in fact immediately disqualify the amendment moved by the hon. member for Yeoville. What is of cardinal importance is that provision is being made in the Bill for a definition of qualifying rental consideration. This is an aspect which, in practices has created tremendous problems in the past. However, the way in which the regulation was interpreted, gave rise to doubt as to the date from which the first period of 12 months should be calculated, particularly when a rental agreement was worded on the basis that the first rental consideration became payable two years after the commencement of the agreement, and only after that is it payable after an interval of 12 months. Therefore making provision for a definition of qualifying rental consideration means a great deal in practice, particularly in the world of commerce.

What is of further importance is that whereas express provision is made with regard to certain undertakings specified in certain divisions in schedule 2 of the principal Act, section 6(1) of that Act contains no general exemption in respect of the sale to a registered vendor of goods in the form of containers, packaging or wrapping material which are not intended for resale as such, but for incidental use in connection with the sale by that vendor of other goods in carrying on the enterprise in respect of which he is registered. Hon. members will agree with me that this creates somewhat of a problem.

The proposed amendment in clause 2(a) is merely aimed at making the statutory provisions clear, as they have been implemented since the inception of the Act, and at contradicting a conflicting interpretation of the special court for income tax, viz. that the provisions of the exemption contained in section 6(l)(b)(i) of the Act are not applicable, or in respect of (a) the sale to a registered enterprise or vendor of goods in the form of containers, packaging or wrapping material intended for used in connection with the sale by him of other goods in carrying on such enterprise in respect of which he is registered, or (b) the sale to such vendor who is registered in respect of any accommodation, hotel or catering enterprise of goods in the form of eating, drinking or carrying utensils or articles or serviettes intended for resale as adjuncts to the supply of any prepared food or beverage.

What is also of cardinal importance, is clause 2(b) of the Bill before us. The proposed amendment is aimed at eliminating the possibility of double taxation. I think the hon. member for Yeoville would agree that we on this side of the House are doing everything possible to eliminate the possibility of double taxation at all costs. In the absence of an exemption, sales tax will be payable, firstly, when a taxable service referred to in paragraph 1(bA) of Schedule 1 is rendered to a registered vendor in respect of any movable asset of the nature defined in paragraph 1(b)(ii) of that Schedule and (b) when such movable asset in respect of which the taxable service was rendered, is subsequently disposed of by the vendor. In terms of the amendment, the former transaction will not be subject to sales tax. This will ensure that the sales tax is only payable once the sale transaction of the movable asset concerned has been concluded.

The hon. member for Yeoville also refer red to clause 6, and with all due respect, I cannot agree here with his arguments on the construction activities and the right of contractors to recover tax, and particularly not those on the amendment of section 34 of the principal Act. Clause 6 amends section 34(3) of the principal Act and now covers the position with regard to construction agreements which have been made before the date on which the sales tax is increased, or before the date on which a tax is withdrawn or decreased.

I believe that the hon. the Deputy Minister motivated this question, as well as clause 7, with which the hon. member for Yeoville experienced problems, properly in his explanatory memorandum on the amending Bill.

Clause 9(l)(d) is particularly important, since it is being proposed in that clause that exemption from sales tax be granted in respect of any repair or maintenance service rendered to mining or quarry enterprises in respect of boring machines and drill strings. At the same time, mining or quarry enterprises which undertake the repair or maintenance work themselves, will be able to purchase all parts and materials necessary to undertake such repair or maintenance work, without having to pay sales tax. I believe that people in the abovementioned industries would welcome these amendments.

The hon. member for Yeoville also referred once again to accommodation, hotel and catering enterprises, and in this regard the amendment that is being effected in clause 9(l)(e), is extremely important. The proposed amendment clearly states that accommodation, hotel and catering enterprises may purchase condiments, spices and flavourings for use in the preparation of meals and refreshments supplied to patrons, free of taxation. Furthermore, the amendment contained in clause 9(l)(f) states beyond all doubt that the goods used for the abovementioned enterprises, in terms of paragraph 2 of Division VI of Schedule 2, read in conjunction with section 6(l)(c) of the principle Act, are alcoholic and non-alcoholic drinks, and not any other goods which are not of that nature.

I believe that we on this side of the House have sufficient reason to give this Bill our full support.

Mr. Speaker, I think the hon. member for Yeoville certainly has a point when he says that it is a problem when foodstuffs are taxed. At present we are paying tax on foodstuffs, while the State revenue is rising daily, and it is cause for concern when the State profits from increased prices. This creates the impression that the hon. the Minister of Industries, Commerce and Tourism, as well as the other hon. Ministers, are not aware of the fact that increased prices are having an extremely harmful effect on the country. After all, it is true that the higher the price of an article, the higher the sales tax, and therefore the State also receives more money from this increase. This is an extremely serious matter, Sir. The last increase in sales tax brought about a 25% increase in tax on all items sold, and apart from this, there was the increased inflation rate. When one takes all this into account, it means a 30% increase in tax. This is an alarming tendency, and something one should guard against. I think the Government should ensure that we do not by imposing tax, place people in such a position that they eventually cannot make ends meet. I do not want to tell the hon. the Minister that we are going to vote against this legislation tonight because the hon. member for Yeoville moved an amendment, but we do ask the hon. the Minister to give serious thought to the matter. What is the problem with the sales tax system we have today? Could we not have that sales tax included in the price of the article? We have spoken to the hon. the Minister about this before. It is a problem, because we often have to deal with less affluent and less skilled Coloureds, Blacks and others, and I am speaking from experience now. The price of the article is indicated on the article itself, but the tax is added on, and sometimes the tax amount is added twice, and as I have said, I am speaking from experience, for I have investigated the matter. Often the ordinary customer cannot object to this, since only the price is indicated on the article. Consequently the person who is not well informed, or a person who is not well educated or who has no knowledge of such matters, cannot calculate for himself what he has to pay for such articles. That is why I ask that we should simplify the system. Let us therefore ask that the tax be included in the price of the article, so that there is only one amount involved.

We shall also have to see whether price-lists cannot be supplied to shoppers in supermarkets so that they can see what the prices of the articles are. Then the housewife can take the price-list home and work out a shopping programme for herself. Then she will be able to calculate what her purchases are going to cost her. What will happen then? The owner of the supermarket next door will take the price-list and compare the prices with his own. In this way, both will then begin cutting prices.

They do that in any case.

The hon. member for Turffontein says they do that in any case.

You have already made that speech, why are you repeating it?

I am repeating it for the sake of those who are stupid, so that they can perhaps learn something from it. With children one has to repeat things two or three times. One takes a child from the known to the unknown. [Interjections.]

I wish to raise another important matter now. Because of inflation, tax has become a problem in our country, and we ask the Government to consider this. We can no longer allow prices to be raised by 20%, 30% and 40% at a time. Then, of course, tax is also imposed, since the State also benefits from this. A conflict of interests between the consumer and the State then develops, and this should be eliminated. At some stage, taxes will have to be imposed on the date of commencement of the tax, while prices are pegged for a certain period. But what is happening in this country today? Every day, prices in the shops, are being changed within an hour or two but the tax does not appear on the article together with the price. One finds that three or four different prices appear on the same articles on one shelf. That is why a price-list should be available, or a price-list one can look at should be attached to the wall. It also happens that prices of 26c, 55c, 65c and 75c are stamped on one tin. In many cases, the tax is then calculated on 26c. The scanning system which is soon to be introduced in this country if the recommendations are accepted, is going to cost the State and all of us in South Africa a great deal of money. One should look into this beforehand.

I definitely agree that tax should be paid on advertisements. This is very important. The more one sees of the advertising campaigns in the country, the more one realizes that a particular firm—I do not wish to mention it by name—benefits from the tax exemption and saves thousands of rands because it has the monopoly on television and radio advertisements.

Who has a monopoly on television?

I am now talking about one large firm. [Interjections.] Yes, several have it.

Do several firms have the monopoly? [Interjection.]

Let us say there are many firms who have large monopolies and that approximately 10 of them have advertising time. Those firms now receive tax concessions. In a country like South Africa, one has the problem that the smaller company cannot survive because the advertising time on television and the radio has already been divided up among the large companies and has been fixed by way of contract for a number of years. That is why I am pleased that taxes are now going to be imposed on advertisements.

There is just one matter which is giving me a bit of a problem. My problem is the ordinary pamphlet which is distributed. I think provision is made for this, but I should like the hon. the Deputy Minister to confirm this. If a pamphlet should be distributed to notify people of a church bazaar which is to take place, for example, in Robertson …

What issue are you dealing with now? [Interjections.]

… would this mean that the distribution of that pamphlet would also fall under this Bill? This is not very clear, and we should like clarity on this.

The fact that the Government subsidizes foodstuffs has been mentioned tonight. The hon. member for Yeoville also referred to this. This is an extremely difficult matter, and that is why one does not wish to ask for more and more subsidies. All we are asking for in this debate is that attention be given to the inclusive system, since the purchaser has no criterion. He does not have the final price before him. A great deal of psychology is involved in buying and selling. If one goes to purchase a suit and the price is R150, the question of tax arises immediately. A surcharge is required and a few rands are added. As a result, this immediately eliminates the buyer’s argument. When one says, “This suit costs R150; I think it is too expensive”, the salesperson says “No, it costs R157. The tax has still to be added. It is your Government which makes you pay this high additional tax”. The moment this happens, the buyer’s argument collapses. That is why the salesperson has the advantage in this matter today. That is why we ask the hon. the Minister to ensure that an investigation is instituted into this matter. The hon. the Minister must please investigate the possibility of making general sales tax inclusive.

Then there is also another aspect I wish to refer to. This concerns the matter of leasing. I think this is a very sound provision we now have in this regard in the present Bill. I am now referring to the tax on leasing. In that respect, there has, of course, been a large loophole thus far, and I think it is quite correct that the hon. the Minister should make an adjustment in the legislation in this regard. I simply cannot quite understand why the services rendered by a mining group or by mines should be exempt from tax, while other enterprises which render a service, are not also exempted. I should like the hon. the Minister to reply to this. I should like to know what the reason for this is.

Mr. Speaker, the hon. member for Langlaagte made some very interesting observations. I am sure the hon. the Minister will take heed of some of the comments made about the disadvantages which GST has, especially when it comes to the public attitude when various items are purchased. The hon. member may have a point when he says that GST should be inclusive in the price in order that people should know clearly what the total cost is going to be when they decide to make a particular purchase.

Having said that, I should also like to put it to the hon. the Deputy Minister that we in the NRP also echo the concern expressed by the hon. member for Langlaagte about the rising costs of foodstuffs. In this respect I also agree with the hon. member for Yeoville, who said that this was something which was burdening a vast section of our population. I believe that we must give due consideration to the fact that food costs should be kept as low as possible. As the hon. member for Langlaagte said, when one applies the general sales tax to the rising costs resulting from inflation, it does mean that the State is actually benefitting from inflation. For this very reason alone it could be said that the State or the Government looks upon inflation as one way of raising revenue. We hear of fiscal drag, which is a product of inflation, and I do believe that there is merit in what the hon. member for Langlaagte and the hon. member for Yeoville have said regarding the need to keep food costs as low as possible.

I want to point out, however, that we in the NRP will not be supporting the amendment moved by the PFP. We have repeated our reasons for this many, many times over the past few years. After all, it has become a hardy annual with the PFP, and particularly with the hon. member for Yeoville, to move an amendment seeking for GST to be removed from foodstuffs. While, as I have already indicated, we sympathize very much with his motives in regard to the cost of food, we accept what we have heard from time to time from those involved in administering GST that the cost of putting into practice such an idea would be far in excess of its real worth. We would prefer to see—if there is a need for certain basic foodstuffs to be given special treatment—that the price of those foodstuffs should rather be subsidized at the production level. I should, however, like to make a special appeal to the hon. the Deputy Minister to ask his department, as well as the Department of Industries, Commerce and Tourism, and also the Department of Agriculture and Fisheries, to take another good look at the production costs of food, the distribution of food and the retail costs of foodstuffs, especially in regard to taxation. One must appreciate that a lot of the input costs in the production of many consumer goods, including foodstuffs, are affected by taxation at various levels. We should like to appeal once again to the Government to endeavour to ensure, wherever possible, that input costs in the production of food are kept as low as possible especially insofar as those costs are affected by excise rates or tariffs, import duties and other forms of taxation. Earlier today we discussed a Bill in regard to import and excise duties and I then mentioned the fact that the imposition of these duties on tractors was increasing the capital costs of producing food, which adds to the burden on the consumer. A tax which is levied at that low level is reflected in the cost of food when it reaches the supermarket where the consumer has to pay a further 5% GST on it. It will be very interesting to find out what component of the total cost of our various foodstuffs is made up by taxation.

This raises the question of double taxation and I am pleased to see in the Bill before us, that in a number of clauses there are provisions which are aimed at preventing double taxation. Here I refer to clauses 2(b), 2(e) and 9(l)(c), which endeavour to eliminate this problem in regard to certain items. One will appreciate that if there is double taxation on a particular item, it is the consumer who has to pay while the Government reaps the benefits, and I am sure that the hon. the Deputy Minister will not like to see this happen.

I want to appeal to the S.A. Agricultural Union as a body representing agriculture to petition the Government to ensure that there is this continuing investigation into input costs into agriculture so that the problems mentioned by the hon. members for Yeoville and Langlaagte and those of various other hon. members who are very much concerned about the cost of foodstuffs can be overcome.

As far as the Bill itself is concerned it is essentially a technical Bill as the hon. the Deputy Minister has pointed out. It is aimed at closing loopholes and it also brings clarification of the provisions of the law as it is applied in practice.

One significant aspect which I notice in the Bill is that we find in a number of clauses that provision is now being made for the reduction of the GST. I think this is a hopeful sign for the future. I do not know whether we shall ever see the day when the hon. the Minister decides to reduce the rate of GST, but we can live in hope. We find this, for example, in clause 6 where although there is now provision made that enables building contractors to recover the cost brought about by an increase in GST, there is also a provision which causes them to reduce their contract prices should there be a reduction in the GST.

There are also the various exemptions which are now clarified, for example, one finds in clause 9(d) that there is a provision which clearly exempts boring and drilling in quarries and mines from GST. This is an improvement.

In conclusion I should like to say that we too, like the hon. member for Yeoville, have certain reservations about clause 7, the clause which enables the Minister to announce in the Gazette or to give notice during a session of Parliament of variations in the rates of tax. Here we see that provision is made for either an increase or a decrease and that these would have to be notified by Parliament at a later stage during the Session. One wonders what the actual practical problems would be in the event of the Minister of Finance increasing the rate of GST and when it comes to Parliament for ratification he does not obtain that ratification? I know some hon. members, especially those on the Government side, will say that it could never happen in South Africa. But politics are changing in South Africa and the day may come when one could be faced with the problem that the Minister of Finance cannot obtain that ratification from Parliament. Another problem that I can envisage is what would happen where people have paid the increased GST, and the increase is then not ratified by Parliament? How could this money even be refunded? I know this is a technical problem, but it is one of those things which one may exercise one’s mind on.

Having said that, we will be supporting this Bill despite our reservation about Clause 7.

Mr. Speaker, the hon. member for Langlaagte made a few remarks to which I should like to react. He rightly referred to the psychology applied by business firms, for example, when a suit of clothing is being sold. Psychology is also applied by hon. speakers when matters are discussed in this House.

I think it is fitting that we should place the statement which the hon. member made in respect of a 20% increase in sales tax, in the correct perspective. On the one hand, one could say that an increase of 1% on sales tax of 4% represents an increase of 25%. On the other hand, it could be stated that an increase in sales tax from 4% to 5% only represents a 1% increase. This really puts the matter into perspective. If one talks to the public about a 20% increase in sales tax the impression is created that 20% additional tax has to be paid on purchase of R100. Of course, this is not true. The fact of the matter is that the tax on an article costing R100 is only R1 more, it is therefore only 1%. This is the actual increase in tax. We should therefore be careful with the statements we make so that we do not convey a distorted image to the general public. This may suit us politically, but we are not promoting a very well-intentioned cause.

The hon. member also referred to the inclusion of tax in the price of articles. I think this is a matter which could be discussed at a high level and which could be investigated to good advantage. The inclusion of tax in the sales price is something which could create a great deal of confusion among the public.

The hon. member also referred to the tremendous price increases and said that at certain businesses the prices of certain articles are even increased up to a few times a day. He also pointed out that this could cost us a great deal of money. If I understood him correctly, he was referring to tax in this regard, because this creates confusion. We should be careful—although we agree with the hon. member’s statement—not to blame the Government for all these price changes and increases. It is true that one wants to keep the price of foodstuffs and other essentials as low as possible, but we should be careful not to drag the inflation rate that we have to contend with, into this legislation. I also wish to express my displeasure at the fact that the official Opposition has tried to give emphasis to its opposition to this legislation year after year by pointing out the detrimental effect which the tax has on foodstuffs. Regardless of the disadvantages of this legislation, and the justified or unjustified opposition to it from the Opposition, I do not think there is any other law on our Stature Book which has been so well received by the general public as the Sales Tax Act of 1978, because although everyone has to pay a little more tax than before, the public sees this as a fair arrangement, because everyone makes a fair contribution to the Treasury.

Now it is also true that periodical adjustments have to be made to legislation such as this in order to eliminate deficiencies. Because this Act, unlike the Income Tax Act, does not dampen initiative, I think it is very appropriate that amendments be effected in good time wherever they are necessary. The object of this amending Bill is therefore to make certain further provisions and eliminate certain deficiencies and obscurities. So, for example, clause 1 is an amendment of section 1 of the Income Tax Act, 1978, by the insertion of the definition “qualifying rental consideration”, which has already been referred to and which should be read in conjunction with the amendments to section 6 in clause 2.

All the requirements which have to be complied with before a rental enterprise may obtain the benefits to which it is entitled, are set out in this clause. For example, this will prevent a deferred first payment of money being made payable in a rental agreement, with subsequent 12-monthly payments. This amendment eliminates any uncertainty. The Treasury does not wait for the tax which accrues to it in respect of rental consideration. I maintain that this is also in the best interests of the lessee. He had to pay the tax in any case, and he can now make timeous provision for this in his budget. In short, this means that a tax, calculated at a rental consideration which accrues to the lessors, shall be payable within a period of 12 months from the date of commencement of the rental agreement.

Something else which is not clear in the Act is the taxability of the material used by an enterprise for packaging or wrapping articles, articles sold for use, while the packaging or wrapping material is not intended for resale. The proposed amendment in clause 3(a) of the Bill provides clearly that such packaging and wrapping material is not exempt from sales tax. Here we are dealing with the possibility of double taxation. It is not the policy to tax any article twice. In any case, this ought not to make any material difference to the price of a consumer product. However, we have been satisfied by the hon. the Deputy Minister. He made it clear that should it appear that such an input makes a material difference, this will definitely be investigated and, where necessary, adjustments will be made.

In clause 3 provision is being made for two further cases of malpractice, and registration certificates may be withdrawn.

Clauses 4 and 5, respectively, increase the interest payable on tax paid in excess and on shortpaid tax, from 7½% to 10%, as from 30 June 1982. I think that in these times of rising interest rates, effecting this increase is justifiable. Furthermore, this legislation seeks to make sales tax function more effectively. I am convinced that this tax system will always remain a form of tax which is well received by the public. With the elimination of these obscurities we have reason to feel that we may confidently support the Second Reading of this amending Bill.

Mr. Speaker, the hon. member for Middelburg has talked about keeping the increase of GST in perspective. I think it is important that we do, but to the taxpayer the question of whether GST has increased by 1% or whether it has increased by 25% is very relevant. The fact of the matter is that the public will be paying 25% more tax. Obviously their total expenditure is not going up by 25%, but on tax their expenditure in terms of GST is going up by 25%. As has been pointed out, if one adds to that inflation of some 15%, one arrives at a figure well in excess of 40% which is the amount of extra GST that has been paid this year compared with last year. That is the true perspective.

In supporting the amendment of the hon. member for Yeoville, I think it is important that we bear in mind the economic background that we have in South Africa today. We have an inflation rate of 16,5% which has been reported to be the highest ever in the history of this country. We are in the situation where the economic downturn has begun and that will obviously result in greater unemployment and in turn in greater poverty. Malnutrition, even in boom times, is a serious matter and it is obviously unlikely to improve during a downturn. This is the background to the situation and in that situation I believe that relief is urgently required.

We need to be removing GST from essential foodstuffs. This will result in fewer people going to bed hungry and this should result in fewer other people going to bed worrying about our future. Sometimes when one talks about 5% GST in relation to foodstuffs it does not appear to amount to much to many people. But when one thinks of the situation that exists in some of our townships, where there are houses that are very overcrowded, one knows that by removing GST one will be able to feed 20 people instead of 19 people with the same amount of money

In addition, when one talks about 5% GST on foodstuffs the problem is that percentages do not have faces or stomachs. They do not feel hunger, they do not suffer from malnutrition and they do not die of starvation. However, in this country vast numbers of people live on or below the breadline and by removing GST on essential foodstuffs more than half a million additional people would immediately be able to be fed at the level at which people in that position are. Put in another way, we would have the equivalent amount of extra food available with the same amount of money for people who are living on the breadline. When one thinks in terms of half a million people I think this matter does become relevant and it is not really a small percentage that we are playing with.

Removing GST on essential foodstuffs will obviously not eliminate poverty. It will not even come close to doing so but it will assist at a time in which many people are getting desperate.

The second aspect to which I should like to refer is in regard to clause 7. The hon. member for Yeoville also referred to it. This clause contains the principle of irreversible taxation without parliamentary consent. Most forms of taxation announced by the hon. the Minister of Finance in his budget speech that come into effect immediately or shortly thereafter can be recouped if that legislation is amended before it is passed by this House because, while theoretically it becomes due and people keep a note of what they are going to have to pay, they do not actually have to pay the money. However, in terms of this amending provision that will become section 49A, it is an irreversible situation because, if the GST is increased and shopkeepers collect that taxation and pay it in, even if the shopkeeper himself was able to get it back a few months later if Parliament refused to pass the law, the person who paid the tax, the consumer, would not be able to get the tax back because, obviously, the shopkeeper would not be able to trace exactly who had paid what tax.

Section 49 of the Act provides for exceptional circumstances in which the hon. the Minister of Finance wants to make changes in GST either while Parliament is in recess or at a time when he would otherwise not be able to do so. In this he was given a certain amount of flexibility. In addition, it limits the increase to 2%, although he can also decrease it. Now we have the proposed new section 49A in which the exception is made the rule. The act as it presently stands, provides for an exception, but now the intention is to make it the rule. It imposes no limits in regard to the extent to which the tax can be increased and I think this is bad in principle.

I honestly find the hon. the Deputy Minister’s comments in his introductory speech quite puzzling. First of all, he says the reason for this is because both Inland Revenue and the various companies need to have sufficient time to adjust to changes in GST. However, it makes no difference whether it comes by way of legislation or whether it is announced by way of a notice in the Government Gazette. The ordinary person can be informed of it, even if it is by way of a Government notice without its having legal effect until the law is passed.

Secondly, the hon. the Deputy Minister points out that the intention is to give it the power of law until such time as the Act itself is proclaimed. As the hon. member for Amanzimtoti pointed out, this is presumptions. It is assuming that because a Minister believes that a certain change is desirable, it will automatically become law. Surely, it is in a sense a contempt of the procedures that should be followed in this House if the Minister gazettes certain measures that will have legal effect although there is no law that has brought that about.

As far as I have always understood it, one of the basic functions of Parliament is to control taxation of all sorts and also how the money is spent. We are, however, discussing taxation tonight, and I think that we should be very, very careful indeed to delegate that sort of authority to the executive. It is wrong in principle and weakens one of the basic roles of Parliament. [Interjections.]

I believe that we must also realize that GST is not a trivial or minor matter. It has extremely widespread effects both in monetary terms and in terms of the number of people it affects. In fact, the motivation for having GST is to spread the taxation burden.