LETTER: Odds are against SMMEs

Acting editor Tiisetso Motsoeneng’s column refers (“Revival or mirage — is SA on the brink of success?”, January 6).

Due to the excessive tax paid (to fund the ANC’s social and racial excesses) by business generally and small business specifically, it is almost impossible for SMMEs to accumulate capital.

Apart from taxes such as VAT and UIF, there is 27% tax on profits and a 20% tax on dividends — never mind any capital gains tax if a business person wants to liquidate an underperforming asset to invest in new plant. We all know our interest rates are too high, so to borrow money to buy plant/equipment (especially from Europe) is extremely expensive.

This all culminates in a huge problem for capital-intensive SMMEs such as those in manufacturing, as it is so difficult to accumulate sufficient capital to reinvest, even if one’s existing business is profitable. Add on all the SA peculiarities such as BEE, employment equity, bargaining councils, the minimum wage and dysfunctional municipalities, and expansion in manufacturing is virtually impossible in a slow or no growth environment.

From an overall tax perspective the SA tax take is about 27% of GDP, whereas in all other African states it averages about 17%. Combine all of this with our terrible, infantile politicians, who have no clue how SMMEs work, and we are in big trouble.

President Cyril Ramaphosa is convening a form of business Codesa, and not one businessperson is on his advisory panel. It is the best example of the Dunning-Kruger effect I have yet witnessed.

Ian Ferguson
Via BusinessLIVE

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