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Zuma faces backlash from Cosatu after signing controversial tax laws

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(iStock)
(iStock)

Labour federation Cosatu is incensed after the government implemented an effective ban on workers cashing in their pension and provident funds. 

It’s threatened action – a threat that came after the labour federation quietly gave in over demands to ban labour brokers and e-tolls, which the ANC insisted on. 

From March 1, workers and employees who have contributed to provident funds will no longer be able to cash in their retirement savings on resignation. The 2015 Taxation Laws Amendment Act and the Tax Administration Laws Amendment Act will only allow monthly payments from the accumulated provident and pensions fund from this year following implementation on March 1 this year. 

Money saved before March 1 2016 is not affected and people who are 55 and older on March 1 are not affected. But money saved from March 1 will be affected as follows:

  • If the money saved from March 1 is less than R247 500 it can be withdrawn as a lump sum; and
  • If the money is more than R247 500, then up to a third could be withdrawn as a lump sum and the remaining two-thirds would need to be annuitised.

The laws also aim at rationalising and equalising the existing range of pensions and provident fund products. 

In the current climate of high consumer indebtedness many workers and employees resign from their jobs to cash in their provident and pension funds to service their debt. Lump sum payments are also frequently used to settle bonds, pay children’s university fees and other important life events. 

Usually the presidency announces through an email to the media and also on its website when a legislation has been signed into law. But it did not issue such a press statement when Zuma signed these two laws. Instead, the development was announced on the national treasury’s website yesterday. The website also revealed that Zuma assented to the two laws on December 24. 

Zuma signed the two controversial laws within a month since they were passed by the National Assembly on November 26. This is relatively fast compared to other laws passed by Parliament. 

Cosatu has consistently opposed these laws. This morning it issued its first combative statement since the departure of former general secretary Zwelinzima Vavi. 

The labour federation said it was “deeply incensed and disappointed” to hear that Zuma signed all the tax legislation from 2015 into law. 

“This is an outrageous and blatant act of provocation by the ANC-led government that will have dire and lasting consequences on the relationship between government and the workers,” it said. 

“This is not just a slight against the federation and the emasculation and undermining of Nedlac [the National Economic Development and Labour Council], but it is an offence against all working people, who have their deferred wages to look forward to after retirement,” said Cosatu. 

“This disdainful act of provocation by the government will get an appropriate and equal response from the workers,” it threatened, adding that workers would fight any attempts to impose the compulsory preservation of their hard-earned deferred wages. 

“We will spare no effort to stop this tyranny; because no government has a right to unilaterally decide for workers how and when to spend their retirement savings.” 

Cosatu argued that savings were part of workers’ hard-earned salaries and should be accessible to the workers as and when they needed them, especially in the absence of comprehensive social security. 

Cosatu, which is known to work hard for the ANC during election campaigns, threatened to withdraw its support and accused Zuma of weakening the tripartite alliance (formed between the ANC, Cosatu and the South African Communist Party) even more. 

“By signing this act, the president has poisoned the relations between the ANC-led government and the workers; he further weakened the alliance and has given considerable comfort to our enemies. 

“This will do nothing to disprove the assertions and suppositions that the movement panders to the left during vote-harvesting periods and delivers to the right afterwards. 

“This will complicate the campaigning for the upcoming local government elections because workers will also find it hard to be persuaded to vote against their interests,” it said. 

Attempts to get comment from Zuma’s spokesperson Bongani Majola were unsuccessful – his phone and text messages went unanswered.

  • This article was amended on January 14 2016 to reflect details of how pensions and provident fund products would be affected from March 1.

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