Budget Speech 2020: Tax incentives for SMEs that create new jobs could be a plan, Mr Mboweni
CAPE TOWN – Finance Minister Tito Mboweni needs to offer more concrete proposals to truly turn things around when he delivers the 2020 National Budget today.
This is according to David Morobe, executive general manager of Impact Investment at Business Partners (BUSINESS/PARTNERS), who said on Tuesday that a key area for the government to focus on was increasing the competitiveness of the country. “This, in turn, will make South Africa more investor-friendly, spur economic activity and assist with issues like unemployment.”
While President Cyril Ramaphosa made some good commitments in the State of the Nation Address (SONA), the small and medium enterprise (SME) sector is hoping to get more clarity in the 2020 National Budget Speech.
Morobe said while South Africa’s ranking in the Global Competitiveness Report had improved, rising seven places to 60th in 2019, he believed there was still a long way to go – particularly in improving the ease of doing business in South Africa. “Contrary to President Cyril Ramaphosa’s goal to be ranked among the Top 50 countries on the World Bank’s Ease of Doing Business Index, South Africa fell two places from 82nd to 84th in the most recent report.”
One positive development that Morobe noted around increasing the country’s competitiveness, was the announcement made during SONA that a new platform, called Bizportal, would now allow a company to be registered in just one day, as well as register for UIF and SARS, and even open a bank account. “Given the well-known fact that SMEs contribute significantly to job creation, it would bode well if the government could offer tax incentives to SMEs who create new jobs, as that would help alleviate the high unemployment levels that our country is facing.”
Morobe said he believed that the government should explore ways to reduce the high costs of cross-border transactions. “We need to improve our trade agreements, by looking at new and re-negotiated agreements with preferential markets, and increase capacity so that more local businesses can export.”
As Eskom’s failure to meet the country’s energy needs remains the biggest issue currently facing local businesses, Morobe hopes that there will be a short-term solution provided in the 2020 Budget Speech. “We are hoping to see, for example, significant rebates or tax reductions for generators or inverters that could help small-and-medium-owner-managed businesses to better manage their energy challenge.”