By: Zandile Majavu
While the last few years have been especially brutal for small businesses for numerous reasons, including the Covid-19 pandemic and the power crisis, the Budget speech this week offered little relief for SMMEs.
Finance Minister Enoch Godongwana announced that there would be no VAT or income tax increases, but he did mention a bracket creep, which means that as salaries keep rising to match the cost of living, workers will end up paying an increased tax.
Also, smokers and drinkers who often support small businesses, will have to dig deeper in their pockets. Alcohol prices will increase between 6,7% and 7,2%, and cigarettes by 4.7%.
Some good news is that the fuel levy will not increase this year because of a tax relief of around R4 billion from the state.
On the small business front, the Treasury has allocated R6 billion over the Medium-Term Expenditure Framework (MTEF) to support resettled farmers through redistribution and tenure programmes.
According to the Budget Review, the Department of Small Business plans to support 120,000 township and rural enterprises, focusing on enterprises owned by women, youth and other disadvantaged groups through interventions such as grants and training.
On economic development, it says: “Government is supporting the manufacturing sector, small businesses and public employment programmes to boost economic growth. In 2024, an independent evaluation will be conducted on public employment programmes to address fragmentation and inform future funding decisions.”
The Budget Review notes that invoices not being paid on time by state entities has had a crippling effect on suppliers, who are frequently forced to borrow money to stay afloat financially, and satisfy their contractual responsibilities with the state entities.
“Where state organs are failing to pay uncontested invoices within 30 days, SEFA [Small Enterprise Finance Agency] must be on standby to pick up the tab through cession arrangements. This indicator must be included in the upcoming MTSF and APPs [annual performance plans],” it says.
