eBusiness Weekly
Government appears blissfully unaware of the impact its policies and decisions have on business.
The formal South African enterprise sector is critically ill.
Where the company tax returns of the 768 000 companies combined and submitted as that of a single entity, there would have been no company income tax (CIT) payable to the South African Revenue Service (SARS) for three consecutive tax years.
SARS data on CIT confirms that the private sector is in a dismal state.
In the tax years 2014 to 2016, assessed joint losses of all companies surpassed joint taxable income by R445 billion.
Less than 1 percent of firms pay 85 percent of CIT
To understand these figures, it is important to keep the following in mind:
If the CIT collected in 2007 had increased annually at the CPI inflation rate, National Treasury would have received an additional R52,8 billion on top of the R198,8 billion it did receive in CIT in 2016.
Assessed taxable company income and CIT lagged significantly against inflation.
Assessed losses for 2014 to 2016 of R2 482,2 billion form a massive debt mountain and even if the environment for businesses improves, will be gobbled up by these losses before they become liable for CIT again.
The only reason treasury still reaps income from CIT is because a small minority of firms remain profitable.
These are mainly companies with a taxable income of R10 million and more.
In fact, the percentage of tax-paying companies declined from 27,9 percent in 2007 to 24,23 percent in 2016. With 42 percent of the 2017 company tax returns already assessed by SARS, a fourth year of being in the red seems most likely.
Consider in addition:
Dismal GDP growth of 0,8 percent in 2018
The additional medication of expropriation without compensation being added to the anti-growth BEE treatment
Electricity tariff increases double the inflation rate to finance an entity that is incapable of ensuring constant energy supply, and a public sector that had metamorphosed from a facilitator of services and infrastructure into a parasite not delivering proper education, proper law enforcement and reliable infrastructure.
Turnover growth since 2018 in negative terrain
Mike Schüssler of Economists.co.za reckons that since mid-2018, the turnover growth of companies in the non-financial sector is negative when considering inflation.
Based on former Bosasa boss Angelo Agrizzi’s evidence at the Commission of Inquiry into State Capture about bribery, one can state that, annually, he had packed stacks of bribe money that exceeded the taxable income of 98 percent of the country’s formal enterprises.
Government appears to be totally unaware of the negative impact of its policies and poor performance on the private sector, especially small and medium enterprises. — Moneyweb.
