The government has put the brakes on retirement tax reforms for two years, but Cosatu is going ahead with mass action because it fears the ANC made the concession only as an election ploy.
Cosatu was unhappy with the reforms taking away workers’ right to choose whether to withdraw their retirement savings as lump sums, by limiting them to only a third while two-thirds had to be invested in annuities.
Through this law, government said it wanted to encourage a culture of saving among workers, but unions argued workers had very little to save.
Cosatu wants the state to completely scrap the proposed reforms, rather than delay its implementation.Senior Cosatu leaders, speaking off the record, said the federation had learnt “hard lessons” in the past when it relied on good faith talks, only for the ANC to go ahead with decisions it did not support.
Cosatu threatened it would not support the ruling party in the local government elections if the reforms went ahead. This threat appears to have prompted the government’s about-turn.
Despite this, the federation’s spokesman Sizwe Pamla said yesterday Cosatu would still down tools on March 1. “We don’t want to go back to the negotiation table with an albatross around our necks. We want to start on a clean slate.”
Trust levels between Cosatu and some government departments such as the Treasury have been at an all-time low after the state’s decision to go ahead with implementing the Tax Laws Amendment Act despite opposition from the federation. During bilateral meeting with the ruling party last year, Cosatu believed it had made gains against the proposed law, irate leaders say.
“This is not yet a victory for workers; it is the first step towards a final victory, which will be the total scrapping of those aspects of the law that workers do not want.
“The mandate from workers was not to secure a postponement but to get the government to commit to expunging all areas that prevent workers from accessing their money. What workers want to hear is – when is the government going to expunge those sections of the law that stop workers from making lump sum withdrawals from provident funds.”
But the Treasury announced it was pushing ahead, and President Jacob Zuma signed the amendments into law on Christmas Eve, taking Cosatu leaders by surprise.
The Presidency claimed labour had been consulted extensively at the National Economic Development and Labour Council (Nedlac). But Nedlac minutes on the issue read: “A Nedlac report was not produced given that the engagements on Tax Harmonisation Proposals, of which Retirement Reforms are part, were not finalised at Nedlac.”
Minister in the Presidency Jeff Radebe yesterday tried to shield Zuma from culpability, telling a media briefing the president wasn’t aware of Cosatu’s objections at the time of signing the law.
Finance Minister Pravin Gordhan appealed to Cosatu not to continue with its mass action, saying the retirement reforms were important in the long-term as they would benefit workers. The extra two years would be used to work on the “design” of the reforms with all stakeholders, he said.
The minister warned that if the reforms were completely scrapped, it would mean that employees would not benefit from new tax benefits contained in the law.
Tens of thousands of workers, many of them not affected by the changes, resigned from their jobs in fear that their savings would be nationalised. Gordhan said it was due to this confusion that the government had decided to hold back on some of the changes.
The law, which would have kicked in from March 1, will be postponed for two years to March 2018, a decision taken at Wednesday’s Cabinet meeting.[Source: iol]