Finance Minister Tito Mboweni will deliver one of the toughest Budget Speeches to date on 26 February 2020.<\/p>\n
Whatever he announces will have a massive impact on individuals and businesses \u2013 and it\u2019s likely that tax increases will be one measure to revive the economy.<\/p>\n
It\u2019s hard not to get caught up in the cloud of negativity hanging over the country: the budget deficit is at its highest in 20 years; investor confidence is low; unemployment is at record levels; the tax base is declining as more businesses resort to retrenchments; economic growth is dismal, dragged down by flailing State-Owned Enterprises (SOEs); and the threat of being downgraded to junk status is still very real.<\/p>\n
Speaking in a recent podcast<\/a><\/strong>, Yolandi Esterhuizen, registered tax practitioner and Compliance Manager for Sage Africa & Middle East, and Gerhard Hartman, Vice President for Medium Business, Sage Africa & Middle East, discussed the tough decisions the Minister will need to make, and how businesses can help to soften the blow, not only for their own organisations but for the country in general.<\/p>\n The Minister will have little option but to increase taxes. This could include hikes in personal income tax and value-added tax (VAT), and will very likely include increases in fuel levies and sin taxes.<\/p>\n We can only hope that this money will be allocated where it\u2019s needed most \u2013 education, job creation, and stabilising the power grid.<\/p>\n Yes, it\u2019s a bleak picture, but we were in a similar situation in the early \u201890s and we pulled through. But if there\u2019s one thing we\u2019ve proven as South Africans, it\u2019s that, when we apply our minds to something, we make it happen. And we can pull through again.<\/p>\n What we need \u2013 and what global investors will be listening out for in the Budget Speech \u2013 is a plan with concrete timelines, and a commitment from all stakeholders to execute it.<\/p>\n Crucially, they\u2019ll want accountability, especially when it comes to struggling SOEs like Eskom and SAA. They\u2019ll want confident communication that the government is doing everything possible to turn these businesses around, to escape a ratings downgrade.<\/p>\n That said, we can\u2019t only rely on the government to make change happen. We all have a role to play, as individuals and businesses, to fix South Africa.<\/p>\n We should view the upcoming Budget Speech not as a harbinger of more bad news, but as an opportunity to engage on the economic policies and initiatives that are available to businesses to turn things around.<\/p>\n The Employment Tax Incentive (ETI) and the Youth Employment Services<\/a><\/strong> programme are excellent initiatives aimed at creating employment and skills development opportunities for young people.<\/p>\n Yet few businesses take advantage, either because they\u2019re not aware of them, they don\u2019t want the extra administrative burden, or they don\u2019t understand the compliance requirements.<\/p>\n The ETI and Youth Employment Services programme incentivise businesses to employ young people through a reduced PAYE bill and extra points towards their Broad-Based Black Economic Empowerment (B-BBEE) scores, respectively.<\/p>\n\n
Between a rock and a hard place<\/strong><\/h3>\n
Look for the silver lining<\/strong><\/h3>\n