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Johannesburg - Though the latest National Budget has outlined numerous plans to stimulate the development of both the small and medium enterprise (SME) sector as well as entrepreneurs, there still remain significant challenges for job creation, said Christo Botes, spokesperson for the Sanlam/Business Partners Entrepreneur of the Year competition.
He said the main challenges government is likely to struggle with over the next budget period will lie with the implementation of these policies.
“It is doubtful that SMEs will see much growth opportunity going forward should these policies not be implemented.”
Botes said without a world class broadband infrastructure linked to a stable and consistent electricity supply grid, growth will remain subdued.
"Entrepreneurs generally thrive on growing their businesses, but the without the basic infrastructure to assist their growth trajectory it is not likely that they achieve their growth," said Botes.
Youth incentive
He said the youth employment tax incentive also has its limitations, and although it has during the first month benefitted 56 000 youths, it could have a far better reach if the incentive is adjusted somewhat.
“As the incentive is aimed towards lower salary brackets it is not particularly attractive to knowledge industries, where the average wage for a young first time graduate is on average R10 000 per month."
Employers in knowledge industries will, therefore, need to pay graduates more and could rather opt to employ fewer youths for a self-funded cadet or graduate internship programme.
Botes welcomes the proposed amendment to the turnover tax regime to further reduce the tax burden on micro-enterprises.
“We welcome and support the proposed tax breaks that micro-enterprises receive," said Botes.
If a business’s turnover is below R335 000 no tax needs to be paid at all, and tax rates for businesses which generate turnover of between R335 000 and R1million has been reduced from 6% to 5%.
Instead of two returns per year only one will now be required, which again supports the endeavours to reduce red tape.
He said the main challenges government is likely to struggle with over the next budget period will lie with the implementation of these policies.
“It is doubtful that SMEs will see much growth opportunity going forward should these policies not be implemented.”
Botes said without a world class broadband infrastructure linked to a stable and consistent electricity supply grid, growth will remain subdued.
"Entrepreneurs generally thrive on growing their businesses, but the without the basic infrastructure to assist their growth trajectory it is not likely that they achieve their growth," said Botes.
Youth incentive
He said the youth employment tax incentive also has its limitations, and although it has during the first month benefitted 56 000 youths, it could have a far better reach if the incentive is adjusted somewhat.
“As the incentive is aimed towards lower salary brackets it is not particularly attractive to knowledge industries, where the average wage for a young first time graduate is on average R10 000 per month."
Employers in knowledge industries will, therefore, need to pay graduates more and could rather opt to employ fewer youths for a self-funded cadet or graduate internship programme.
Botes welcomes the proposed amendment to the turnover tax regime to further reduce the tax burden on micro-enterprises.
“We welcome and support the proposed tax breaks that micro-enterprises receive," said Botes.
If a business’s turnover is below R335 000 no tax needs to be paid at all, and tax rates for businesses which generate turnover of between R335 000 and R1million has been reduced from 6% to 5%.
Instead of two returns per year only one will now be required, which again supports the endeavours to reduce red tape.
