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A letter to the ANC Youth League

10 October 2012, 08:25

Dear ANC Youth League

Why Pravin Gordhan needs to go when Zuma goes…

We hear rumours that you won't support President Zuma for another term? Is that true?

If it is...

As the Youth, you play a vital role in our country’s future, and therefore as a businessman, I beg you to let Pravin Gordhan pack his bags with President Zuma.

Pravin Gordhan – supposedly to be one of the custodians of the South African Economy - is the final nail in the coffin for South African economic growth. The man is absolutely out of touch with business reality.

The minister has neither any regard for job creation, nor is he conscious of the fact that the Global Financial Crisis IS STILL on-going.  The “Broaden the Tax Base and take everything you can” attitude is short-sighted and indicative of a civil servant whose head has become too big on the power of being Finance Minister.

It is the youth of South Africa that will remain unemployed if something isn’t done immediately.

Here are the facts:

It’s a well-known fact that collectively, Small Business remains the country’s largest employer.  So why does Gordhan work AGAINST the governments’ job-creation plans?

Many small business owners just cannot keep up with the MORE OR LESS 15 SARS returns per annum. More than 99% of small business owners are not accountants, and therefore need accountants and tax practitioners to help them manage their affairs. Many of these are holding small companies at mafia-style ransom due to the fact that tax practitioners and accounting firms remain unregulated. They can basically charge their clients whatever they want – also a reason why so many small business owners just give up and close their businesses.  SARS compliance is becoming cumbersome, tedious and expensive. Also, Gordhan has now successfully moved the entry barriers for the formation of new small businesses even further. They may start up – but soon they will close their doors as the current compliance issues have just become too many.  This means people will become unemployed – even worse – people will not be hired and South Africa’s unemployment will rise even further.

For a business to exist they will need Processes, Systems and People as well as the following basic infrastructural platforms:

  1. First and Annual Registration of the company (Yes, don’t think you that once the first registration is done and dusted that all is sorted – you will have need of accountants who will charge you a fortune to submit your annual return to the DTI) (Why is this necessary? Can't the DTI get that from SARS?)
  2. Banking Account – with astronomical business banking account costs – we beg for regulation for fair banking fees for small businesses. After-all isn’t the Finance Minister alongside the Reserve Bank Governor the Banks’ Regulators? The Finance Minister is quite capable of introducing a bill protecting small businesses – but we all know he lacks the political will!
  3. The around 15 Annual SARS returns should you decide to register for VAT – the accounting fees may run over R20 000 per year for a small company. Don’t expect too much eager help from SARS – you will spend days upon days in SARS offices, which will result in losing business while you should be focused on making money.
  4. BEE Certificate – your BEE Rating agency will charge you between R 600 and R 1000 per year to have your BEE Certificate done – this is on-going! Trust me; you still need that certificate even if you are an exempted micro enterprise (EME)! Remove any reference or compliance necessity for any small business with a turnover than less than 10 million. Make it illegal for anyone to even remotely discriminate against these businesses on grounds of BEE! Then you will see more investment into small businesses and an increase in hiring!
  5. Rent – Office Rental in South Africa is among the highest in the world. And it’s becoming more expensive each year – just ask coffee shops in malls!
  6. Employees and recruitment nightmare and costs in the newspapers. Make a mistake and you can close your business, as you will not be able to dismiss a non-performer without expensive assistance from a labour lawyer. Please help SA get better labour laws that will make it easier for businesses to deal with non-performance.
  7. Office Equipment – Software to set up a computer – that is an operating system with an Office Suite will cost you around  R7000 per machine – thanks to Microsoft – Please assist in negotiate better prices for small business from Microsoft.
  8. Telecommunications that includes telephones and internet, and expect when Telkom cables are stolen to be without telephones for two weeks. Please beg Telkom to offer cheaper wireless service solutions to small businesses.
  9. You will need a generator because the existing ESCOM Power supply remains under pressure and most local municipality power grids are very unstable – meaning that you will face power outages – and on this note,
  10. Expect the Fuel price to sky rocket at the Rand depreciates while commodities like oil get more expensive abroad – this while ESCOM will also increase their fees!
  11. Expect to pay the Devil his E-Tollthe final nail in the coffin that will probably tilt your costs of doing business so high that you will go out of business – even if you have managed to do everything mentioned above and not earned one cent in revenue yet!
  12. Oh and I nearly forgot – some ridiculous PAIA Submissions Manual and returns and payments to suppliers to help you draw this up! – Very soon!  (The Promotion of Access to Information Act 2000 requires a PAIA manual to be drawn up by everyone who is carrying on a trade, business or profession in South Africa.) How could the finance minister allow a bill like this to be passed? Another nail in the coffin of small business!
  13. Have I forgotten the fact that you need an additional private postal suite – just in case the Post Office workers decide to help themselves to your goods you may be sending? OR GO ON STRIKE AGAIN so expect to pay couriers more! And get all you accounts e-mailed to you in PDF Format!

Dear ANC Youth League, it is therefore not surprising that more than 97% of small businesses do not make it during the first four years of being in business. And SARS is supporting the process of killing businesses and creating unemployment.  If Gordhan had any idea of the above he would not have even considered taking provisional tax from businesses with a turnover of less than R5 million. He would not even have considered introducing E-Toll and would not even have considered a third annual PAYE Reconciliation – we all know its coming!

But no, Gordhan in his wisdom still wants to implement more stringent tax conformities and even more rules… further kicking South Africa’s limping small business sector in the stomach. Do you as the Youth League understand that it is your members – the Youth - who in the end cannot be hired for jobs while we have this ridiculous scenario playing out?

What do we really need? We need tax incentives for large companies using the services of small enterprises and that there should not be any form of discrimination on grounds of BEE and size! We will see small business doing more business and hire more people! The rate of Employment will increase!

So please, when you ask the President to pack his bags, please will you ask Pravin to do the same! We need progressive visionary leaders who can stimulate growth, not kill it!  And above all we need brave people like Mario Ambrosini of the IFP who dared taking on even Parliament in the Constitutional Court and won! That took guts! Do you have guts?

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