Democratically Engaged, Active and Responsible
The Department of Mineral Resources briefed the committee yesterday on its strategic plan for the five-year term 2020/25, and budget for the 2020/21 financial year.
The South Africa Revenue Services (SARS) has predicted that it will lose around 15% to 20% of its tax revenue this year as a result of the nationwide Coivid-19 lockdown.
The responsibility of filling the gap will now fall upon the South African taxpayers, says David French, Tax Consulting Director at Mazars.
He added that there is also a real question as to whether there will be a large enough taxpayer base left at the end of the lockdown period to make a meaningful contribution to SARS’ collection efforts by the end of the financial year.
These changes mean that Treasury will have no choice but to reassess the national budget that it presented to Parliament in February of this year, he said.
“It looks like South Africa will get some reasonable funding from institutions like the World Bank and the International Monetary Fund, but on the collections side, the loss to the fiscus is going to be huge.
“With Treasury planning to table a special adjustments budget on June 24, we can only hope that the measures that will be introduced, will not be destructive to the taxpayer base.”
In particular, French points to excise duties which have already seen a significant drop in collections for SARS.
“Items like the fuel levy, VAT as well as sin taxes on alcohol and tobacco sales, are going to perform well below what was expected because of the low economic activity and outright bans on certain products.
“We also do not expect to see this recovering once lockdown ends, because consumers and businesses are probably going to be spending less and focusing more on saving throughout the rest of the year.”
French said that it is likely that SARS does not yet know how to manage the crisis that this has created.
“SARS will be looking at very technical issues once the lockdown is over. There may be the question of whether any expenditure during this lockdown time would be taxable, because any money spent by companies may not be in the production of income – which poses a risk to taxpayers.
“Also, how aggressive is SARS going to be about collecting these taxes, given that taxpayers are likely to be in dire straits?”
Ultimately, he points out that SARS can only collect what is there.
“Economic activity hasn’t stopped completely, so there will be at least some VAT and other taxes, like import duties, to collect. But from the sectors that have suffered losses or that weren’t active, there simply won’t be anything to collect.”
Even once the economy restarts, French says that there will not be enough recovery taking place to fill the collections gap.
“Collections on excise taxes may pick up again, but it is likely to be subdued. Corporate income taxes on the other hand, may see many more companies submitting tax deductions based on expenditure and losses as a result of the lockdown.
“It would be interesting to see how SARS approaches these submissions, since such deductions would cover the taxes on the future incomes of these companies as well.”
Recruited youth will be deployed to different schools and government buildings across the province to assist with screenings, data capturing and monitoring compliance.
A group of “concerned citizens” has filed an urgent application at the high court in Cape Town challenging the constitutionality of the national coronavirus command council (NCCC) and the validity of the lockdown rules.
“Each of us have had our freedom curtailed by the regulations. We no longer enjoy the freedom to move around as we please, to eat and drink what we want, to work and study as usual and to visit our friends and families,” the group said in a statement.
SA has had more than 50,000 deaths that are not related to Covid-19 since the lockdown was announced.
This is according to a home affairs presentation made to parliament’s home affairs portfolio committee.
It showed that a total of 50,356 deaths were registered in this period. When the presentation was made on Tuesday afternoon, the official Covid-19 death toll stood at 286. This means the official deaths registered by the department of home affairs that are not related to Covid-19 stood at 50,070.
Trade minister Ebrahim Patel has hinted that Cape Town could remain on level 4 lockdown when some parts of the country move to level 3 at the end of May.
This after the Western Cape recorded the most confirmed Covid-19 cases and deaths — accounting for almost 60% of the cases in SA.
By Monday, the province had 10,035 confirmed cases with 166 deaths. Most of the infections and deaths have been in Cape Town.
Speaking on eNCA, Patel acknowledged the DA’s request to get the lockdown lifted in the Western Cape but said a “comparative analysis” spoke for itself.
“I’d like to emphasise that we must depoliticise the Covid-19 crisis,” he said. “We have to put all our historical differences aside and work hard to contain the spread of the virus. We need less grandstanding … regarding different provinces, we’ll be taking into account the feedback from each region, then [President Cyril] Ramaphosa will make an announcement soon.”
Patel also expressed concern over the transmission of cases from the Western Cape to the Eastern Cape.
“We are very concerned about Cape Town. It is now an enormous outlier in terms of infections. We’ve done comparative analysis between all districts and provinces and, without question, this is a worry,” Patel said.
“There’s also a flow of transmission from the Western Cape to the Eastern Cape. The virus can still flare up elsewhere. It could be Johannesburg or Durban next.”
Last week, while hinting about possibly moving to level 3 lockdown, health minister Zweli Mkhize said Cape Town may need tighter restrictions.
“We are dealing with a dynamic situation and will monitor and evaluate the progress in various parts.
“It must be expected there may be areas where it might not be the best way to just let everything get back to normal. We might need to consider heightened interventions of lockdown in various forms.”
DURBAN – It was the first province in the country to report a COVID-19 case and for a long time, KwaZulu-Natal had the most number of deaths but it has seen a slight decline.
Premier Sihle Zikalala says indications are that all districts in the province will move to Level 3 of the lockdown.
“The province is currently as of today sitting at 10-percent in terms of active cases and has moved down to fourth position countrywide,” Zikalala said.
The premier has warned that a move to Level 3 would still require compliance.
“There are strong indications that as KwaZulu-Natal all our regions may move to level 3. However, there is a caveat in order for that to happen and remain that way, everyone will have to comply with all the non-pharmaceutical approaches to preventing infections,” Zikalala said.
He says should a new trend of infections be seen in certain districts, they will have to be moved back a level.
Meanwhile, the health MEC says the province is ready to deal with an influx of patients at its health facilities.
More than 6,000 beds have already been prepared.
The provincial government has appealed to people to continue adhering to lockdown regulations and precautionary measures.
Hair and beauty businesses have called on the government to allow the sector to return to normal operations, arguing that social distancing and hygiene are inherent attributes of the industry.
“It is ironic that one can never acquire a hairdressing certificate unless they demonstrate that they understand how important hygiene and sanitisation is,” said Feroza Fakir, vice-president of the South African Association of Health and Skincare Professionals.
Businesses in the industry will only be allowed to operate during level 1 of the lockdown. Industry players are concerned that by the time that level is declared, many businesses will have crashed.
“People are very desperate and they are not able to put bread on the table,” said Fakir.
The association is working with the Employers’ Organisation for Hairdressing, Cosmetology and Beauty (EOHCB) to lobby the government to allow the industry to return to work.
The EOHCB said it is in the process of submitting a detailed plan to the department of trade & industry, arguing that it is important to allow hairdressers, nail technicians and beauty therapists to return to work. General manager Cobus Grobler said two such plans have already been forwarded to the department.
“We could open up establishments which have between two and five employees, with strict requirements, such as keeping a mandatory distance of up to 1.5m per work station. For larger businesses, we could say no full-body waxing or no client is allowed to spend more than an hour in an establishment, with thorough sanitisation and decontamination done between clients,” said Grobler.
“What is certain is that we have to return to work or we will have nothing to return to when the lockdown is lifted.”
Modern Hair and Beauty MD Chris Stofberg, whose company supplies 1,800 salons with products, said it is critical for the government to open up not just the industry, but the entire economy.
“We employ about 75 people and we didn’t make any turnover in April. We are not able to pay full salaries. We can’t go on like this. I see notices of salons closing every day, albeit under strict conditions.
“Hair, nails and beauty are key to the psychological wellbeing of people. I genuinely feel the ongoing closure of small businesses will do more harm than the virus itself.”
Co-operative governance & traditional affairs minister Nkosazana Dlamini-Zuma, announcing two weeks ago that beauty products could be sold under level 4, said: “You can do it yourself.”
The high court in Pretoria on Friday declared that all people in SA are entitled to a number of rights which cannot be suspended, even during the Covid-19 state of disaster.
These include the right to life, the right not to be tortured in any way and the right not to be treated or punished in an inhumane and cruel way.
The court made these orders in an application brought by the family of Collins Khosa, the 41-year-old man who died after he was allegedly beaten by soldiers and metro police outside his home in Alexandra on April 10.
The family had sought these orders to ensure that no other members of the public would suffer the same fate as Khosa.
Khosa’s life partner, Nomsa Montsha, stated in an affidavit that she was at home with Khosa and two others when SANDF members accused Khosa of violating Covid-19 lockdown regulations.
Montsha said Khosa was taken outside the yard, where the soldiers poured beer on his head and body, slammed him against the cement wall, and kicked, slapped and punched him. He died a few hours later.
His family approached the high court in Pretoria on May 2 for a number of orders, including that soldiers and metro police who were in the vicinity of his house at the time be disarmed and suspended.
They also asked for an order compelling defence minister Nosiviwe Mapisa-Nqakula and police minister Bheki Cele to develop and publish a code of conduct and operational procedures for soldiers and police deployed during the state of disaster.
And they sought an order compelling the state to establish a freely accessible mechanism for civilians to report allegations of torture or cruel, inhumane or degrading treatment committed by the police, army and metro police during the state of disaster.
Judge Hans Fabricius granted all these orders on Friday.
He also ordered that members of the SANDF, police and metro police departments remain bound by the law to use only the minimum force that is reasonable to perform an official duty.
Fabricius awarded costs to the three people who brought the application, including Montsha.
In his judgment, Fabricius said the urgent application before him was of an unusual nature as it asked him to restate the law on the rights of all people.
Fabricius said all parties before court, including himself, were in agreement that the Covid-19 lockdown was necessary.
“The public is, however, entitled to be treated with dignity and respect, whether rich or poor.”
He said the public was entitled to the right to life and everyone has the right to freedom and security of the person.
Fabricius said the declaratory orders sought by the family “can assist in clarifying legal and constitutional obligations in a manner that promotes the protection and enforcement of the constitution and its values”.
Government lifts ban on e-commerce after DearSA campaign
DearSA welcomed Trade and Industry Minister Ebrahim Patel’s gazetting of new regulations today (Thursday 14 May 2020) allowing for all e-commerce transactions to take place, with the exception of restricted goods – notably cigarettes and alcohol.
This follows a campaign launched a week ago by DearSA in which it urged the minister to lift the restrictions on e-commerce, failing which it would have no option but to approach the courts for urgent relief.
DearSA requested a response from government by the end of Thursday, 14 May 2020.
“The announcement from Minister Patel is welcome and demonstrates government’s responsiveness to the voices of ordinary South Africans, who have been calling for e-commerce to be opened up without restrictions,” says Daniel Eloff of attorneys Hurter Spies, which is representing DearSA. “As the lockdown progresses, South Africans are understandably concerned at the impact it is having on their lives and on the economy, and we know this because of the surveys conducted on a regular basis by DearSA. There is growing frustration at the needless harm that is being done to the economy and small businesses by the extension of the lockdown to e-commerce platforms, the relaxation of which cannot possibly help in curbing the spread of the virus.”
Major boost for small businesses
Eloff says the lifting of the ban is a major boost for small businesses which – though they may be limited in terms of their physical interaction with customers – can at least now trade online to rescue their businesses.
The Government Gazette notice issued today says “e-Commerce can be a critical enabler to opening the economy through contactless transactions, which can reduce the movement of consumers, and the density of shoppers in retail spaces. Further it can accelerate innovation, support local manufacturing and increase access by the informal market and poorer South Africans.”
Eloff notes that this is precisely the intent and the wording of DearSA’s letter delivered to the Minister a week ago.
In terms of the regulations, online retailers are required to provide for as many payment options as possible for consumers, to reduce the risks of transmitting the virus, and to enable poorer consumers to access delivery services.
The regulations also specifically mention courier services for spaza shops and informal traders, so as to provide online shopping opportunities for customers in poorer areas.
Health and safety requirements
The Gazette notice imposes strict health and safety requirements on companies engaged in e-commerce, which includes screening of workers, the obligation to wear masks, workplace sanitation, and social distancing. Customers receiving goods from couriers are also required to wear masks.
Overkill
DearSA’s campaign to the government referenced several economic studies, some of them by government itself, show that a prolonged lockdown will have a devastating impact on the economy, with the construction sector likely to suffer a 30% decline in employment. A study by SA-TIED suggests the financial and manufacturing sectors are likely to experience a 15% decline in employment if the lockdown is prolonged.
The effect of the lockdown will be a massive decline in the demand and supply of many industries, with particularly severe effects in the service sectors, such as restaurants, entertainment, tourism, travel and hotels.
“While this is a welcome move by the government, we cannot assume that the economy will automatically right itself,” says Eloff. “Huge damage has already be done and urge government to further ease restrictions on economic activity while maintaining vigilance over the spread of the virus. However, we are now at the point where the lockdown is likely to result in many more deaths through poverty and other causes than through the virus itself. We have to get the country back to work.”