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Youth wage subsidy a reality: Gordhan

Feb 28 2013 17:10

Cape Town - Details of the youth wage subsidy are still uncertain, Finance Minister Pravin Gordhan said on Thursday.

He, however, hinted that provision for tax breaks to employers could be made later in the year.

"Currently the details of the design are not available," he told Parliament's select committee on finance, a day after tabling the 2013 Budget.

Two years after first mooting the much-contested measure, Gordhan said on Wednesday it would become reality.

But whereas he had initially mentioned R5bn in payroll tax breaks for qualifying employers, Gordhan gave no figure this time.

"We have mentioned it in the budget review and in the budget speech in order that for appropriation purposes, perhaps later in the year, it is on the map," he said.

"And at this stage we can't talk about differences between A and B, either in design terms or in allocation terms, because there is no allocation," he told MPs who asked for figures and an explanation on what the initiative involved.

"The number of R5bn... was interpreted to mean in concrete rand terms. What in fact was intended was that this was a tax expenditure of R5bn.

"It will be a tax loss the minute it actually comes into effect and legislation is passed in Parliament. We will have a more concrete feel for when implementation actually comes in."

The minister had suggested legislation would be brought to Parliament by mid-year.

The Democratic Alliance welcomed the return of the youth wage subsidy. DA finance spokesperson Tim Harris said calling it an "incentive" was simply the minister's way of appeasing the labour movement opponents of the measure.

Asked what had changed to resolve the political battle, Gordhan said: "In political conditions, nothing that I am aware of except that the dialogue of the Nedlac process has produced an outcome, and I think that there is a recognition that we need to find each other in a constructive way to solve an important problem."

Trade union federation Cosatu had argued the subsidy would see employers fire older workers to hire young ones, in order to secure the tax concession.

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cosatu  |  da  |  pravin gordhan  |  tim harris  |  youth wage subsidy  |  tax



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