#budget2017 for the entrepreneur – disappointing!

Budget 2017? Not interested in all the fluffy stuff, what the story is with internal politics or Molefe, quite honestly, not even interested on how it will be spent. What I am interested in, is how it will affect the small business owner and the entrepreneur. If we can sort them out, they will sort our economy out.

So how did #budget2017 go for the entrepreneur? I have 2 points to comment on.

Taxing the “rich”

All the media sources are referring to the “rich”, so let me do the same. Although I’m not convinced that you can be called “rich” just by there mere fact of earning more than R1.5m per year.

Anyways, so if you earn more than 1.5m a year, you will now be placed in a new bracket and will pay tax at 45%. By the way, the highest tax bracket since 1994.

Some commentators are saying that this is OK because we are now getting aligned with some of the first world countries. I don’t agree. In those countries, you pay a high tax, but you get the best education, the best medical care, you don’t need to spend thousands to secure your home and hundreds for a security company to protect it. I wonder what the real tax percentage in SA is, when you include everything we pay that should technically come from government. Much much much more than other countries.

I understand where government is coming from – Robin Hood approach. Tax the rich and give it to the poor. There are two issues: one, a good portion of the money never reach the poor and is abused by government corruption. And two, at what point are entrepreneurs saying, screw this and just move their business abroad.

I don’t agree with this. Let’s empower entrepreneurs. Let’s create a community where success breads more success. Not one, where you penalise the most successful in the short term and lose all the great stuff that can be done over time.

Small businesses

Oi! Not a single new tax break or incentive for small businesses. Not a single thing to encourage entrepreneurship, other than money allocated to help SME’s through government programmes which haven’t delivered anything meaningful to date.

In an economy where we need entrepreneurs more than ever, we don’t give them a single incentive to start or build businesses.

Nothing more to say, just Oi! The moment government understands the power of entrepreneurship, we will be able to create a better economy. Until then, let’s celebrate 1.3% growth. Pffffft.

10 Comments

  • Jacques
    February 23, 2017 at 2:13 pm — Reply

    Looking at the number of individuals earning more than 1.5million a year vs the rest of the individuals (population if you can call it that), I would say this can be seen as the “wealthy” bracket. “Rich” is being able to put food on your table and paying your bills. Referring to the direct quote “Wages in South Africa increased to 18104 ZAR/Month in the third quarter of 2016 from 18045 ZAR/Month in the second quarter of 2016. Wages in South Africa averaged 11954.60 ZAR/Month from 2004 until 2016, reaching an all time high of 18104 ZAR/Month in the third quarter of 2016 and a record low of 6742 ZAR/Month in the first quarter of 2005” This would be more than enough to keep up a small household, so start taxing the “rich” and leave the “wealthy” as they are the ones doing the 60hour work weeks to keep the Rand out of trouble and the “Rich” class are the ones just collecting their envelope month end.

    I was always taught if you want to learn someone a lesson start taking their money. Seeing that the “rich” as I call them or known in the wider public as the middle to lower income bracket, are the ones disrupting the economy with strikes, wage demands and unwillingness to work for more. Let them start paying for their “sins” by means of tax. In essence give them the salary increase but offset this against a higher tax bracket.

    As for entrepreneurs in SA I would say this is a punishment as well. They are the innovators and the disrupters working towards a higher monthly income while others just “earn” their monthly grants. They are now being victims of the system due to their willingness to work hard and make the difference. Anyone can go and do themselves a favor and go read up about the life story of entrepreneurs in SA. Their “wealth” did not land in their lap. They worked for it starting with nothing. They didn’t go on strike and demanded a higher income, because they were dependent on creating their own income. So they had no choice.

    Improvise, adapt and survive In this lovely country of ours otherwise you will become a statistic.

  • Lorraine Marais
    February 23, 2017 at 2:37 pm — Reply

    Totally agree Marnus, what a big difference tax breaks and incentives for small businesses to encourage entrepreneurship will make! Its sad to see that SME’s through government (BEE) programs is not grabbing these opportunities with both hands! Government should offer opportunities to ALL entrepreneurs, no matter what race or color! Surely we all pay taxes!

  • Francois Naude
    February 23, 2017 at 3:40 pm — Reply

    One thing that sets true entrepreneurs a part from the rest is their ability to adapt and pivot. If you want to make it work, you will. It’s sad that there are so many political and bureaucratic challenges for people to become entrepreneurs, but we will make it work never the less. With the advancements made in the ICT space we no longer have to be inhibited by the geo-political issues. If at all possible take your business online. If the SA government does not want to support the growth of SME’s the SME’s will move abroad and become global competitors. Just sad that the SA economy won’t benefit from their success.

  • Gary Leicher
    February 23, 2017 at 3:46 pm — Reply

    I agree with your point of view Marnus.
    As an entrepreneur in today”s challenging but very exciting business environment in South Africa it would have been great to hear that government were offering some sort of incentive to businesses.
    I think that government need to acknowledge that small businesses do so much for the economy as well as employment.

  • Arnold Johnson
    February 23, 2017 at 4:01 pm — Reply

    I agree with you and with Gary Leicher – The small business, the new entrepreneur creating business impact the economical growth on a large scale.
    What does the (current) government actually see when they think about small businesses and entrepreneurs – Is it something they see as essential to the country…

  • Yihan Bronn
    February 23, 2017 at 11:54 pm — Reply

    Baie dankie vir n stukkie kennis wat ek nie voorheen gehad het nie.

  • Sharon
    February 24, 2017 at 7:35 pm — Reply

    Thank you. My thoughts exactly. Especially since I am in the process of starting my own business. They should put theit money where their mouths are.

  • Martin Ngcobo
    February 27, 2017 at 7:23 pm — Reply

    South African is come to the end of increasing the tax for those earning a lot but I think they supposed to decrease 45 percentage is too high.This will be discouraged the investors.Thanks

  • Matt (Digital Kungfu)
    February 28, 2017 at 7:42 am — Reply

    Okay, totally agree, but what can we do about it? That would be a far more interesting conversation to have…

  • Emmanuel
    March 17, 2017 at 6:10 pm — Reply

    This is just the right approach to such a situation and i totally agree. I personally think that the government should give incentives such as funding, entrepreneurship programmes within schools and mentorship to those starting or wanting to start businesses.

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