COSATU opposes UIF tax holiday whilst workers are unemployed

The Congress of South African Trade Unions strongly rejects Treasury's unilateral decision to give a one-year Unemployment Insurance Fund (UIF) ‘tax holiday'. 

Our opposition is based upon the following key principles:

UIF taxes are deducted from workers' salaries. This is workers' hard earned money, not Treasury's private fund.

Treasury did not consult COSATU and workers on this unilateral decision to change the way workers' money is used.

A UIF with such a massive surplus coexisting with crisis levels unemployment is a scandal. This should be dealt with not by reducing contributions, but by substantially increasing benefits, and the numbers of unemployed covered by the UIF.

Extensive negotiations took place at NEDLAC on the UIF Amendment Bill on how to expand access to UIF benefits for workers and pregnant mothers. This Bill has subsequently been delayed for more than a year at the National Assembly. We have been led to believe that this unheard-of delay at Parliament is due to Treasury's opposition to expanding UIF benefits for workers and to their desire to have the UIF transferred to Treasury's control.

It is that it is scandalous to not allow workers, especially the unemployed, to access the R92 billion UIF surplus in an economy with 34.4% unemployment. The inclusion of public servants will further substantially increase the surplus in the fund. The priority should now be how to expand access to the UIF and not to give business a tax holiday.

The UIF should be expanded to cover pregnant mothers who have had miscarriages and cover dismissed and retrenched workers up to 12 months from the current 9 months. It should also be expanded to cover workers who are forced to resign by their employers (constructive dismissals) to avoid being fired.  A more comprehensive roll- out to cover other unemployed should be urgently considered as part of the introduction of comprehensive social security.

This unilateral tax holiday undermines government's commitment to release a discussion paper on comprehensive social security and the Judge Davis Tax Commission's expected report and proposals. 

Treasury has now, after the release of the 2015 budget, called for public comments on the UIF tax holiday and promised to engage Nedlac on it. At the same time Parliament is adopting the 2015 budget, which includes a tax amendment Bill which incorporates this proposal for a UIF contribution holiday.

This is Treasury's normal way of undemocratically driving things through parliament, on the basis that the budget cannot be passed, without this legislation. This makes it clear that Treasury is neither genuine nor serious about such consultations and engagements, but is merely engaging in damage control after COSATU raised its objections at NEDLAC. 

What is needed now is for government to:

Cancel this UIF tax holiday for business, and therefore withdraw that section of the tax amendment bill;

Table the UIF Bill at the Portfolio Committee on Labour;

Release the discussion paper on comprehensive social security; and

Negotiate at NEDLAC on how to expand the UIF fund to the 34.4% unemployed workers.

This will be a first step towards helping workers during this economic crisis.

Statement issued by Patrick Craven, COSATU national spokesperson, March 17 2015

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