The SAIT's comments on the Budget Speech 2014
12 March 2014
Posted by: Author: SAIT Technical
Author: SAIT Technical
The SAIT welcomed various proposals contained in Minister Pravin Gordhan’s ‘election budget’ for the 2014 fiscal year. The SAIT would however have liked to see more reforms to the small business sector, mechanisms to increase foreign direct investment including action plans against labour unrest as well as mechanisms to increase ‘real’ jobs, which can only be created through sustainable economic growth.
In 2013, the total tax increased by 11 per cent while nominal GDP is up only 9,7 per cent, thus the real tax burden increases. Personal tax relief provided in the budget equals 2,3 per cent while inflation is 5,6 per cent and wage increases are over 7 per cent.The SA government provides 16,1 million welfare grants while South Africa has less than 5 million actual personal income tax payers. This is clearly not sustainable and alternatives to increase the tax base need to be considered by the government.
For the small business sector, the minister must have as his/her main objective assisting and growing the number of South African small businesses. The SAIT would have liked to see the turnover level of SBC’s increased to R 50 million in order to align it with the proposed changes to the DTI’s BBBEE categories of exempted micro enterprises and qualifying small businesses. A ministry for small business and the appointment of a Minister of Small Business, as is done in Australia and the UK for instance, are also called upon. The SAIT also called for an increased VAT registration threshold and to remove the red tape coupled with VAT registrations.
The headquarter company regime contained in section 9I of the Income Tax Act is also not enough to encourage foreign direct investment into South Africa. The SAIT would like to see a reduction in the corporate tax rate coupled with an increase in the VAT rate, subject to more exemptions and zero-ratings to combat the regressive effects of VAT.
Please click here to access the SAIT's submission on the Budget Speech 2014.