Youth Wage Subsidy: DA will work in Parliament to fix watered-down legislation
Today Finance Minister Pravin Gordhan will table the Employment Tax Incentive Bill to introduce a Youth Wage Subsidy.
This Bill will not introduce a real, strong Youth Wage Subsidy because of changes made to the original 2010 policy. The DA will work in Parliament's finance committee to roll back these changes.
The fact that this is a watered-down version of the original Youth Wage Subsidy is shown in the cost estimate of R1.3 billion to R3 billion, significantly less than the original R5 billion tax loss budgeted in 2010.
The effect of this is to dramatically reduce the number of young people estimated to benefit from the subsidy.
The original version would have helped 423 000 young people. According to yesterday's Medium Term Budget Policy Statement this new version "is expected to support about 200 000 jobs".
This Bill provides a weaker incentive for three main reasons:
- Existing young workers will not be subsidised;
- Jobs created for entry-level and part-time young workers in sectors without wage determinations will not be subsidised; and
- There is no longer any mechanism to allow a "cash payout" for the subsidy if a company's PAYE bill is depleted.
Furthermore, this new version also includes a questionable 31 December 2016 "sunset clause", requiring an amendment bill in that year to extend the subsidy. This makes no sense and suggests that the Bill may simply be used as a cynical election ploy.
The DA will work in Parliament's Finance Committee to fix this Bill and introduce a real, strong Youth Wage Subsidy.
Statement issued by Tim Harris MP, DA Shadow Minister of Finance, October 24 2013
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