Following Finance Minister Enoch Godongwana’s annual Budget speech, Garth Rossiter head of Credit at SME banking platform Lula said that more could have been said and done to address the plight of SMEs.
Rossiter said that given the importance of businesses in South Africa and their ability to create jobs, small businesses in particular, the Budget speech should have offered more support to small businesses.
“I would have liked to see more being done to support SMEs in an attempt to drive these profits. In an environment where SMEs continue to struggle with load shedding, high interest rates and a generally weak economy, it would have been good to see more being done to address their plight,” Rossiter said.
Taxes
According to Rossiter, the lack of actual tax increases including income tax, VAT, fuel levies will be well received by consumers.
“The lack of increase in tax bands, though, will be felt by most consumers, although they won't notice this immediately,” Rossiter said.
Tax revenue is R56.1 billion lower than expected, which Godongwana said was largely due to lower corporate tax collections.
Low tax revenue speaks to the fact that companies are struggling in the current environment, or in simple terms, they are not making the same profits to tax as in prior years.
“What we are seeing instead, is the introduction of a global minimum tax rate on large multinationals. While I understand the government wants a piece of the tax these entities generate, I am not sure creating a burdensome tax will encourage these large businesses to invest and expand in South Africa,” Rossiter said.
To add to that, large businesses not wanting to invest and expand in South Africa could limit job creation, he added.
IOL Business