Business opposes new tax by metros

Johannesburg - Business Unity SA (Busa) has asked for a meeting with the SA Local Government Association (Salga) to discuss a proposed tax on business in South Africa’s five metropolitan municipalities.

“While it has been reported that this matter has been canvassed with Busa, we are not aware of this,” the organisation said in a statement on Monday.

“We have thus far only been able to establish that there have been some discussions at local level with chambers that are affiliated to us.”

According to an article in Business Report last week, eThekwini, Johannesburg, Nelson Mandela Bay, Ekurhuleni and Cape Town were proposing a tax on business, to help raise R19bn in additional funds.

The report quoted eThekwini treasurer Krish Kumar as saying the metros were already in discussion with the National Treasury.

Kumar reportedly said there had been initial discussions with Busa and regional chambers of commerce.

'Stealth' taxes

Busa said the timing of the proposal was unfortunate, given all the other “stealth” taxes on business, including tolls roads in metro areas and the significant escalation of administered prices, particularly for electricity and water.

These were already placing a severe burden on the already high cost of doing business in South Africa.

Additional taxes on the turnover of locally-based business were likely to hit the survival of small businesses and manufacturing concerns in particular, Busa said.

Many of these have much tighter margins than their turnover figures suggested and already battle to manage the many downside risks they face in the depressed but high-cost environment, it said.

Busa said metropolitan municipalities could focus on improving efficiency, “with the often reported billing and revenue collection problems being a case in point".

It also called for much more exploration between local authorities and the National Treasury, with the assistance of the financial and fiscal commission.

Rather than looking at only the imposition of additional taxes on business, other funding sources should be explored.

“There should be acknowledgement that allocations in the last few years to the metros from the fuel levy, and in terms of VAT exemptions, have provided some assistance to metro municipalities,” Busa said.

“If the concern from the metros is that there are insufficient mechanisms in place for them to benefit from increased revenue accruing to the national fiscus, where such increased revenue ultimately results from local development successes, we believe the debate should be framed in this way.”