New liquor law in force

New liquor law in force: Business owners selling liquor will have to do it within the confines of a new list of provisions and regulated trading hours or risk having their liquor licences revoked. This comes after the Minister of Trade and Industry Rob Davies last month gazetted the National Liquor Norms and Standards. The new rules must be implemented with immediate effect.

The new rules that apply to those businesses that sell liquor on-site such as restaurants, taverns and bars include: no entry for those in possession of any guns or knives, no loitering or littering outside the premises, no disturbing neighbours, the putting in place of mandatory safety and evacuation measures, the availability of free condoms on the premises as well as tap water and ablution facilities at no cost to the patron.

The rules further state that it is against the law to sell alcohol to anyone under the age of 18 or to buy alcohol on behalf of them. If there is any doubt about the age of anyone buying alcohol, the business owner must ask for the buyer’s identity document. Alcohol may also not be sold to someone who refuses to provide proof of age or for those wishing to buy alcohol to drink off premises. A person under the age of 18 years, accompanied by an adult, may be allowed access to a liquor-licenced establishment but no alcohol may be served to such a minor.

The new rules have set maximum permissible trading hours for businesses in the liquor industry. These are: 6pm to 6am, seven days a week for night clubs in business areas and 6pm to midnight for those in residential areas; and 10am to 9pm from Mondays to Saturdays and 10am to 5pm on Sundays for businesses with on-site consumption licences in residential areas.

Businesses with off-site consumption licences such as bottle stores must keep records of all sales of more than 25 litres to any unlicensed person, such as the buyer’s name and address, kind and quantity of alcohol bought, and the price and reason for the purchase.

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Electronic tender portal for SMMEs

The announcement by National Treasury to launch an electronic tender portal in March 2015 is welcome news for small businesses. The portal will make it easier, more affordable and transparent for small firms to do work for the government.

National and provincial departments must from April 1 publish all tenders greater than R500 000 on the portal. Municipalities will join the system on July 1, and must place all tenders of over R200 000 online. Finance minister Nene said in his budget speech that suppliers will only be required to register once on the National Treasury’s database when they do business with the state. Tender documents will be available for free on the portal and tender advertisements in newspapers and the government gazette will be phased out.

The database will interface with the SA Revenue Service (Sars), the Companies and Intellectual Property Commission and the payroll system. The system would also be able to verify a supplier’s tax and Black Economic Empowerment (BEE) status, necessary for the allocation of preference points.

In addition, the e-procurement portal will also allow the National Treasury to identify public sector officials doing business with the state, a practice which the government is seeking to outlaw.

Two-year phase in

The government will start off slowly and develop the electronic tender portal to its full potential in two years, the National Treasury’s chief procurement officer Kenneth Brown told Fin24 last month. Brown said the new system was long overdue, following the disbandment of the national tender board in 2004, which saw procurement being devolved to a fragmented system of over 600 government entities

In the 2013/14 fiscal year the government spent R500bn on goods and services and on construction services, and the establishment of an e-procurement portal forms part of the National Treasury’s aim to make the government’s procurement process more fair and effective.

Along with the e-portal, a national price-referencing system developed by the National Treasury’s new Chief Procurement Officer will help government to improve the quality of spending by providing state institutions with data on the ranges within which the price of commonly used goods and services should fall. The new system will also be rolled out on April 1.

Likely challenges

Besides the odd glitch here and there, possibly the biggest challenges that the National Treasury is likely to face once the electronic tender portal is up and running is ensuring that sufficient small firms benefit. South Africa’s high internet costs, slow download speeds and more access to broadband outside main economic centres (such as in poorer parts of cities or in rural area) could hamper efforts to get small firms to benefit.

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What is “twin peaks”?

Twin peaks is the new approach of National Treasury through which one body would be responsible for prudential oversight of the financial sector, and a separate body would regulate market conduct in the sector. The  process is still unfolding, but there is a fairly clear picture of what the twin peaks approach will mean.

Minister of Finance, Nhlanhla Nene

In practice, the South African Reserve Bank (Sarb) will house a prudential authority that will not just regulate banks as it currently does, but will instead oversee the safety and soundness of all financial institutions. At the same time, the Financial Services Board (FSB) will become the new ‘financial sector conduct authority’, concerned specifically with how financial institutions conduct themselves and treat their customers. The market conduct authority will also have a specific obligation to monitor the sector for emerging risks and trends, and decide whether these should be brought into its net.

In the current landscape, these responsibilities are shared in different combinations between different regulators. Twin peaks allocates them more clearly to dedicated authorities. While the merits or otherwise of a twin peaks approach can be debated, what South African consumers will really want to know is whether it will mean that the market conduct authority will be able to fulfil its mandate with more vigour than the FSB has done. There is a general feeling that the regulator has not shown an ability to act swiftly or effectively enough in cases where consumers have ultimately lost a great deal of money.

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Budget at a glance

Finance Minister Nhlanhla Nene’s first national budget is conservative and shows government’s intent to tighten its belt. The budget deficit of 3,9% is lower than expected, although the total state debt will rise to 42,5% of Gross Domestic Product (GDP).

Rich South Africans will pay more tax, but not excessively more.

The only real surprise in the budget is the 80,5c per liter rise of the fuel levy, especially the 50c per liter levy of the Road Accident Fund.

Fiscal framework:

Tax proposals 

Income tax:

• Increase marginal personal income tax rates by one percentage point for all taxpayers earning more than R181 900 per annum.
• Taxpayer with an income of R200 000 per annum will pay R21 per month more. (Younger than 65)
• Taxpayer with an income of R500 000 per annum will pay R271 per month more. (younger than 65)
• Taxpayer with an income of R1,105,000 per annum will pay R1105 per month more. (younger than 65)

Very little personal income tax relief via adjustments of tax brackets, rebates and medical scheme contributions:

• Total fiscal drag relief is R8,5 billion.
• Taxpayers earning less than R450 000 per annum will pay less.
• Taxpayers earning more than R450 000 per annum will pay more.

VAT rate remains unchanged at 14%

Transfer duties on the sale of property:

• Rates and brackets to be adjusted to benefit middle-income households
• No transfer duties payable on property transactions below R750 000
• Decrease in transfer duties on property transactions between R750 000 and R2,3 million
• Increase in transfer duties on property transactions above R2,3 million

Fuel Taxes

• Increase in the general fuel levy of 30,5c per litre
• Increase in the Road Accident Fund (RAF) levy of 50c per litre
• Overall increase in the fuel levy of 80,5c
• Overall tax on fuel is approximately 41%

Electricity levies

• Proposed increase of the electricity levy from 3,5c/kWh to 5,5c/kWh. (This is a temporary measure and will be replaced by a carbon tax in 2016)
• Energy-efficiency savings tax incentive to increase from 45c/kWh to 95c/kWh

 Grants

• Old age, war veterans, disability and care dependency grants will increase by 4,4% or R60 to R1410 per month.
• Child support grants increase to R330 per month.
• Foster care grants increase by 3,3% or R30 to R860 per month.

Spending programmes:

Over the next three years, government will spend:

• Total expenditure will increase by 7.9% per year from R1 240 billion in 2014/15 to R1 560 billion in 2017/18
• At least 60% of non-interest expenditure to improve social services and alleviate poverty.
• R647 billion on basic education, including R36.7 billion on school infrastructure.
• R634 billion on local development and social infrastructure, including R145.5 billion on municipal infrastructure.
• R502 billion on health, with R46.6 billion on the HIV and AIDS conditional grant.
• R498 billion social protection.
• R197 billion on post-school education and training.
• R18 billion on providing free meals to over 9 million learners.

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