As all eyes will be fixed on Finance Minister Pravin Gordhan’s Wednesday budget speech, SMEs are optimistic that economic growth is certain despite projected tax increase announcement.
Speaking to the SABC, Ben Bierman the Managing Director of the Business Partners Limited, a local risk financier of the SME said the expected tax hikes will likely be heavy on the affluent and be lenient on small businesses.
“I think in the broader budget narrative, one would probably hope to see some initiatives focused on increasing the scope and attractiveness of small businesses formation and to ensure that small businesses continue to thrive as they are so vital for economic growth.”
Bienam says due to the current economic climate small businesses cannot ask for tax relief. However, there are other mechanisms in place such as department of small businesses development that will make the impact of expected tax increase minimum.
“It’s ironic to ask for tax relief in the context of seeing government revenues are under pressure but we know that there is a very neat set of tax regulations that addresses the needs and requirements of small businesses for instance; small business corporation tax which makes it easier and provides lower effective tax and we wish they can potentially look at providing some more relief for small businesses.”
He says low small business taxes and more funding of the SMEs will encourage more people to start their own businesses.
“Once you get the economy going , we expect 1.4%-1.5% growth this year. But if the SMEs’ sector itself can also get some attention and the funding gets increased maybe the small businesses development ministry, then we can have a better environment for SMEs to contribute to the SA economy.”
Despite reports of uncertainty around Gordhan’s position, Bienam is adamant that the minister will not be distracted in his budget priorities. He also praised Gordhan as sound and prudent minister that is respected around the world.