Cape Town - The red tape and costs involved for small to
medium businesses is stunting entrepreneurship, according to the South African
Institute of Tax Practitioners (Sait).
The high costs involved to legitimise many small to medium
businesses hampers entrepreneurship and this contributes negatively to the
economy because it cripples job creation opportunities
The institute is calling on Finance Minister Pravin
Gordhan to make tax policy reforms that is in line with the ever changing
Gordhan will deliver the National Budget speech on February
27 and is widely expected to touch on issues such as mining taxes, the National
Health Insurance system and the National Development Plan.
“The NDP identified small businesses
as the key driver to eradicate unemployment, but compliance with tax laws
remains a massive obstacle to many entrepreneurs,” said Sharon Smulders, head
of tax policy and research at Sait.
Smulders believes the current turnover tax regime,
introduced in 2009, should be revised in order to remain relevant for the
changing business environment.
“We commend the initiative of President (Jacob) Zuma to follow in
the footsteps of former President (Thabo) Mbeki in establishing a commission of enquiry
into tax policy,” said Sait's chief executive Stiaan Klue.
In 2010 Judge Dennis Davis, who was the deputy chair of the
1996 Katz commission of enquiry into taxation, called for the re-establishment
of an enquiry into tax policy reform, pointing out that the final report of the
Katz Commission was never presented to parliament or released to the public.
Klue said that the global financial crisis and the growing
budget deficit highlight the need for a critical re-analysis of the
sustainability of the South Africa's tax policy.
"An analysis of the lessons learnt over the past 18
years must be conducted, and should inform a new strategy which can achieve a
more balanced democracy in the NDP for 2030 and beyond,” Klue suggested.
The institute also proposed a relaxation in the current
provision in the Income Tax Act for registered internships. It said that this
would address the youth wage subsidy and satisfy employers, labour unions and
“Promoting internships through tax incentives for business in a bid to educate the youth and serve as a tool to transfer skills, will not only achieve the objectives of government by introducing the youth wage subsidy, but it will also alleviate unemployment and provide practical business tools to the unskilled to become entrepreneurs,” said Ronel de Kock, head of the tax institute.
* Visit our 2013
Budget section for full coverage of Finance Minister Pravin Gordhan's
National Budget speech.
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