Budget 2018: Draft Public Procurement Bill ready for Cabinet

A draft Public Procurement Bill will be submitted to Cabinet in March in anticipation of its release for public comment. Announcing this yesterday in his Budget speech, Finance Minister Malusi Gigaba said that, once in force, the Bill is expected ‘further enable government to use public procurement strategically to advance transformation, achieve efficiencies, and improve governance’. Next week, notes Pam Saxby for Legalbrief Policy Watch, ‘National Treasury will issue a directive to all government departments and public institutions, instructing them to pay suppliers on time, or be charged with financial misconduct’.

These were just two of the less widely reported pronouncements made in a speech spelling out the ‘tough calls’ necessary for arriving at a Budget government hopes will ‘maintain the trajectory of … (delivering on) policy objectives’ and simultaneously ‘sustain public finances’. Others included: the imminent release of draft legislation giving effect to ‘some’ of the Davis Tax Committee’s tax administration recommendations; that the two new ‘twin peaks authorities’ provided for in the 2017 Financial Sector Regulation Act will be established ‘on or soon after 1 April 2018’; that ‘further steps’ will be taken to strengthen the financial regulatory system; and that a ‘policy brief’ on broadening ‘the scope of environmental fiscal reform’ will be published ‘shortly’ for comment.

According to the Minister, once operational the draft legislation on tax administration will: make the South African Revenue Service accountable to the Minister of Finance; establish ‘a supervisory board’; and introduce ‘measures to strengthen the Office of the Ombud’. The powers of the ‘twin peaks’ authorities will be ‘phased in’ to facilitate ‘a smooth transition’ to the ‘tougher regulatory system’ envisaged – which will be further strengthened to include ‘deposit insurance’ and ‘a new way’ of dealing with financially distressed banks. Draft legislation on these issues will be published ‘shortly’. Regarding environmental fiscal reform, Gigaba alluded to measures aimed at: improving water resource management; mitigating pollutant emissions; and encouraging the recycling of plastic waste.

Alluding to steps already being taken to ‘detect, disrupt and deter illicit financial flows’, the Minister said that Treasury is also ‘investigating options’ to ‘further curb’ the practice of ‘excessive interest deductions’ apparently used by companies to ‘reduce their tax liability’. In addition, with immediate effect, value added tax will apply to ‘foreign businesses selling electronic services to South African consumers’. While it is not clear from Gigaba’s speech when ‘an amendment to the medical expenses tax subsidy’ is likely to be introduced, it will be used to fund the roll-out of national health insurance ‘over the medium-term’. Within the same timeframe, a fund will be established to support small and medium enterprises ‘during the early start-up phase’.

Parliamentary hearings on the fiscal framework and revenue proposals tabled with the Budget will be held on 28 February, in anticipation of which the National Assembly's Standing Committee on Finance has called for written submissions within the next five days.