Open Letter to Minister Tito Mboweni by Gerhard Papenfus, CE of NEASA

OPEN LETTER From Gerhard Papanfus, Chief Executive of the National Employers Association of South Africa

GERHARD PAPENFUS – CEO, National Employers Association of South Africa

29 July 2021

Mr Tito Mboweni
Minister of Finance

Dear Minister Mboweni

The recent spate of violence and looting experienced in the country has exacerbated the crisis faced by an already fragile economy and business community.

A multitude of businesses, already severely affected by the Covid-19 pandemic, have been devastated, destroyed and gutted by looters and have been left with very few options in their fight for survival.

Although some of these businesses may have insurance for these eventualities, a lot of them do not, as it is simply not affordable, and even those who do, have to continue with the payment of overheads while they are waiting for an insurance payout, which may well take a long time, without being able to trade and generate an income.

Such eventual insurance payouts can in any event not compensate for the loss of customers, goodwill and the inability to trade.

It is, therefore, our respectful view that it would be appropriate for Treasury to implement similar measures, in order to assist affected businesses to rebuild, manage cash flow, and regain some stability as those measures implemented by virtue of the Disaster Management Tax Relief Act and the Disaster Management Tax Relief Administration Act for the purposes of the Covid-19 disaster.

These proposed measures include:

  • deferment of provisional tax payments without interest or penalties;
  • deferment of VAT payments without incurring penalties;
  • deferment of PAYE without incurring penalties or interest;
  • a payment holiday from Skills Development Levies; and
  • any other appropriate relief measures.

We are aware that there are currently some pending proposals in this respect, however, none of these proposals have yet been gazetted, and no mention has been made in terms of possible VAT relief. It is submitted that the payment of VAT by affected businesses, at this time, will place these businesses in an enormous financial predicament.

It is appreciated that implementation of these measures will, for a short period, impact on the revenue collected by the South African Revenue Service. It should, however, be common cause that the demise of these businesses will have a much more profound and long-lasting effect on the tax base, unemployment, economic growth and investment.

It is, therefore, our sincere hope that this proposal will receive due consideration and be implemented on an urgent basis.

G.C. Papenfus

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