POLITICS

Thanks For Listening To That Boring Speech, Comrades. There's No Pay Hike But You Get A Tax Break.

President Zuma signed off on the zero pay hike for politicians days before his disastrous State of the Nation Address, and published it that morning.

12/02/2017 15:38 SAST | Updated 13/02/2017 06:17 SAST
REUTERS/Sumaya Hisham
President Jacob Zuma during his State of the Nation Address (Sona), delivered to a joint sitting of the National Assembly and the National Council of Provinces in Cape Town on February 9, 2017.

Days before President Jacob Zuma delivered his disastrous State of the Nation Address (Sona) he signed off on a pay hike for the politicians who had to listen to him: zero. But they'll benefit from a pension tax break brought on by a change in their pension fund rules.

Almost nobody got an increase, based on the recommendations of the Independent Commission for the Remuneration of Public Office Bearers. In November 2016, this commission recommended that pay would not be increased this year for most politicians, but there would be a 4 percent increase for local government councillors and a 6 percent increase for magistrates and the lower-paid traditional leaders.

The president signed his approval on February 1 (an earlier version had errors in it, backdating some pay increases to 2015 and forgetting the change to the pension payments) and it was formally gazetted on February 9, the day of the Sona.

The pay hike is for the deputy president, ministers, deputy ministers, members of Parliament (MPs), permanent delegates to the National Council of Provinces (NCOP), premiers, members of the provincial executives (MECs), members of the provincial legalislatures (MPLs) and traditional leaders.

The politicians' pay includes a basic salary which is 60 percent of the package, and an employer's pension contribution equal to 22 percent of pensionable salary.

But while there isn't a pay increase, there's a bit of help for politicians: they get to dodge some nasty tax bills.

This year's remuneration notice drops the reference to "the remaining 32 percent of the employer's pension benefit contribution". This is apparently a result of a change to the tax laws last year, which would have seen political office bearers paying punitive taxes of up to R22,000 a month on the state's very generous contribution to their pension scheme; to avoid the new taxes, the state apparently changed the rules of the political office bearers' pension fund. At the time, the remuneration commission had raised doubts about such a change to the pension rules, with some members of the commission feeling it was immoral for the politicians to dodge tax in this way.

"The commissioners were deeply divided," said Judge Cagney Musi in a gazetted memo on the subject in February last year. "There were some who held the view that it is unfair and immoral to enact a law and subsequently or simultaneously exempt the lawmakers from its negative effects.

"They felt that the commission was, in effect, requested by the minister of finance to start the process of giving immunity to political office bearers against the negative effects of the amendment act."