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The Democratic Alliance (DA) in the National Council of Provinces (NCOP) is disappointed that the ANC has chosen to rubber stamp the Tax Laws Amendment Bill through the NCOP rather than send the bill back to the National Assembly for re-consideration.

The Tax Laws Amendment bill includes a repeal of a 2006 tax incentive that allowed taxpayers, subject to certain thresholds, to make a salary sacrifice for employers to provide bursaries for their employees' schooling.

This was a logical, conscious decision and well-motivated to MPs at the time. It incentivised the growing middle class to take the responsibility for the education of their own children, relieving the state of the burden of funding their education.  Limits were even set to target those in the “lower middle class” who were not yet automatic “private school” customers.

Fourteen years later the case is even stronger.  There are not enough state-funded schools to meet requirements, and those that exist are insufficiently resourced. There is simply no money for new schools to be built in order to keep up with demand caused by rapid urbanisation and population growth.  State funded schools are notorious for overcrowded classrooms, insufficient teacher to scholar ratios, sub-standard teaching and poor matric results.

Considering the benefits of shifting more scholars from state funded schools to privately owned and funded education, it is counter intuitive that this incentive would be done away with. The revenue foregone by this scheme, even using the figures that Treasury admitted were flawed, is far less than the cost of absorbing these scholars into the state system. Revenue foregone is approximately R4,074 per claimant according to Treasury, noting that many claimants have more than one “beneficiary dependent.”  The State’s “Per Learner Allocation” is approximately R16,000.

With education at the heart of our progress out of our current economic woes, this is far from a good policy decision.

If the current incentive is considered to “be too costly to the state”, Treasury should reduce the limits which they themselves have raised quite aggressively over recent years.

During deliberations on the bill, the Select Committee found the amendment to the tax concession for bursary funding particularly problematic.   Had the committee not been rushed through the process of passing the bill with the end of the calendar year looming, they would have no doubt rejected the repeal.

The ANC have chosen political expediency over correct decisions at the behest of the Executive and are satisfied with being a rurubber-stampingapdog to the National Assembly.

Issued by The DA