Give SMMEs a break to recover – Lets’ tax sensibly

By Zoleka Lisa, VP: Corporate Affairs, SAB

Zoleka Lisa, SAB’s VP of Corporate Affairs

On 22 February 2021 President Cyril Ramaphosa called for the country to rally behind small, medium, and micro enterprises in the name of economic growth and recovery. 

Two years ago, the COVID-19 pandemic caused havoc that continues to be widely felt amongst the entire beer value chain. Resultantly, 30% of our local craft breweries have been decimated translating to over 150 000 jobs lost. This was further exacerbated by the different alcohol bans that were imposed on the industry in order to manage the pandemic. Among the craft brewers who have had to close down their businesses is the first black woman microbrewer in South Africa Apiwe Nxusani-Mawela who sadly had to watch her booming business dwindle. 

SAB is of the view that there must a deliberate intention by government to resuscitate the economy through providing a tax relief for small and medium brewers.  As the National Treasury finalises the 2022 budget, it is prudent that they are progressive in the way they create innovative measures for SMMEs (in particular small and medium brewers), to contribute to economic recovery. 

The Minister of Finance recently went live asking the public to give him tips on what to prioritise for the Budget. Our main tip is to call for a tax break for smaller businesses to allow them to recover from the COVID-19 impact.

Government should consider granting a reduced excise duty. Part of the economic recovery of SMMEs should come from an excise rate discount that will allow them to recover and grow. Similar policies have been successfully implemented in several African countries, and have been found to stimulate local agriculture and the extensive value chains of the industry, creating direct and indirect employment. 

Taxes should not hinder a country’s economic goals, such as the push for economic recovery and the drive to increase investment in South Africa. The principle of economic growth and efficiency is maximized by a tax system that is aligned with these economic principles and goals.

Excise tax policies need realignment as our economy gears for recovery. Blanket tax rates that lack nuance, that do not for instance take into consideration the size of the business and the weight of the tax liability it must bear, requires a serious review. 

For the sake of our industry, and the thousands of small businesses that call it home, we welcome any call from government to reassess how excise policies can help create a  business-enabling environment.

Visit the official COVID-19 government website to stay informed: sacoronavirus.co.za