SAIPA, the South African Institute of Professional Accountants has some advice for Finance Minister Nhlanhla Nene when he delivers the annual budget speech next month. It’s all about giving small businesses a break and being smarter about how he slices up the pie.
Give small businesses a break
Top of the list, and in the interests of boosting the economy, is increasing the Small Business Corporations Taxable income threshold.
“This is important because small businesses are the engine-room of the economy, so they need all the support they can get to grow,” says Faith Ngwenya, Technical Executive at SAIPA. “Cash-flow for small businesses is critical and the lack of it is the chief reason why most fail in their first 18 months of operation. That is why government needs to do all it can to help them stay in business and plough their extra cash back into their companies.”
Clamp down on wasteful expenditure
With little room to increase revenue, the Finance ministry needs to be smart about exactly how much money it allocates to each government department. “However, as we all know, a lot of financial resources are inappropriately used and often there are poor controls to detect and or prevent it, so that is why we are calling on government to do more to stop this disturbing trend,” she says.
“In order to better its balancing act, Nene will need to overhaul the budgetary allocation.”
With some of the money Nene saves by implementing the above suggestion, Ngwenya recommends that he redirect it into education. “But, this needs to happen in tandem with proper systems being implemented for the accountability and monitoring of the utilisation of these funds by the Basic Education and Higher Education and Training departments.”
“Greater accountability is an absolute must, else the money will not be effectively used.”
Finally, Ngwenya believes that social security should remain as the recipient of one of the highest budget allocations. “Certainly, we would welcome a higher old age and disability, pension, foster care and child grant increase as the recipients of these grants plough the money back into the economy. However Ngwenya raises question marks on the child grant, particularly the proposal to extend the child grant support eligibility age to 23. The financial implications on the increased pull of recipients resulting from the additional five years for eligibility?
“How will these costs be financed when we are sitting with such a huge budget deficit?” she asks, recommending that Nene reconsider increasing the size of the pool of beneficiaries.
For more on Budget 2015, visit www.saipa.co.za
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