The debate over taxing retirement funds and benefits is not over yet by a long chalk.
At hearings on the Smith Committee report on retirement of the parliamentary joint standing finance committee this week, notice was given that the Smith and Katz Commissions of Inquiry were not the final words on the subject.
For one, Guy Smith, the chairman of the retirement committee, indicated that he personally was not in favour of Katz's proposals to tax the income build-up of retirement funds.
Trade union federation, Cosatu, also threw a brick into the already troubled waters by saying it saw no reason why pension fund contributions should be tax deductible.
The whole issue of retirement now seems set to be referred firstly to a task group to draw up a preliminary structure which would then be referred to a national forum.
The parliamentary committee will probably make recommendations this month or early next month to Trevor Manuel, the minister of finance, on how the process should go ahead.
A major criticism directed at the Smith Committee was it did not have a wide spread of representation, particularly of labour groupings.
At the parliamentary hearing Cosatu representative, Irene Charnley, said Cosatu was opposed to pension fund contributions being given any tax incentives. The deferment of tax on contributions should be scrapped.
Cosatu membership contributed to retirement provident funds not because of tax incentives but because they wanted to save.
She was also opposed to the Katz Commission recommendations to impose a tax on the income build-up of funds. The proposal was unfair because the public service funds were almost wholly invested in government stock, with the result that most income was in the form of interest.
Against this, private sector funds had most of their investments in equities which did not attract the new tax - and, she said, private sector funds would be busy restructuring their investments to minimise the tax even further.
She said the tax had been raised to help fund reconstruction projects.
The better way to go about it would be to reintroduce prescribed investments which would force all the funds to invest a portion of their assets in improving infrastructure through a government issued "Reconstruction Bond."
She suggested about 10 percent of the R500 billion held by pension funds be invested in the bond.
Smith said , in his personal capacity, he did not agree with the Katz proposal to tax the build-up on interest and rent income of retirement funds.
To his mind it was a form of double taxation.
Smith said the theory used to be that your retirement fund contributions would be removed from the taxable part of your income because you were not actually receiving the money.
When you retired and received a pension it was then taxed.
Now the money was to be partially taxed through the Katz tax on interest and rent income on capital in retirement funds.
Other members of the committee disagreed with Smith on the basis that interest income of a fund was not money actually earned and contributed by a fund member.