The retirement industry has not been targeted by the Katz Commission as a source of easy revenue.
In fact, if Professor Michael Katz is to be believed, the R500 billion industry will ultimately benefit from the commission's recommendations, which were spearheaded by the controversial tax on income implemented in the recent budget.
"I can assure you that the commission never said, 'Where can we get x amount of money?' That was not the starting point," Professor Katz told this week's launch of theSaturdayPaper/NBS Bank Investors Club in Durban.
"There are benefits to being in the system ... when you are part of the system you get the benefits of the system."
Katz said the commission could not ignore the fact that the retirement industry enjoyed substantial tax concessions.
"We want to provide an incentive for retirement. The question is how much? What does the tax system do for education? What does it do for housing or health care?
"The single biggest tax concession from the state is in the area of retirement."
He said the commission's investigations into the retirement industry revealed a lack of tax neutrality.
"You have got pension funds, provident funds, retirement annuities. All of these have the same objectives but different tax treatment.
"The first thing we needed to do was put all retirement funding vehicles into the same tax regime. That will simplify the rules enormously."
In outlining the commission's approach to tax reform, Katz emphasised the need for a holistic process that had both short and long-term objectives.
The principles on which the commission based tax reform were:
* Low rates with a broad base. "When you have a low rate people's incentive to avoid comes down."
* Tax neutrality. "Tax should be neutral to commercial decisions. There are about 200 incentives in the tax system at the moment. Government should re-evaluate everyone."
* Equity. "A tax system that is not equitable is not moral and consequently doesn't have any credibility."
* Sound administration. "For ease of administration you have to have a cohesive structure. Everyone must be in the net."
With the principles for tax reform set, the next step was to determine what the total fiscal burden should be and how it should be split between direct tax and indirect tax and between corporate and individual.
Katz said the establishment of the SA Revenue Services would help to provide the certainty essential for a sound tax system. "That is qualitatively the most important aspect of this year's budget."