Ventures set to fail

CHARLES MAISEL, in his letter (Cape Times, February 17), points out that South Africa is ranked lowest in entrepreneurship. He wrongly blames training for our shortcomings.

This misses the point. We fail to create a dynamic job-creating business environment because the risk is greater than the reward. The government and state-owned enterprises pay about 30% higher salaries than the private sector .

An honest, tax-paying, self-employed person works half the year for SARS. Their salary is subjected to PAYE and any profit is charged at 28% company tax. If this entrepreneur wishes to take funds out of the business, there is a 15% dividend tax .

Also, of course, there is 14% VAT to which must be added fuel levies, skills levies, WCA and UIF. If the company is an importer, excise and import duties may apply. Never mind the currency risk. When the imported goods arrive at the harbour, if winds don’t prevent offloading, the chances are that customs will “inspect” the cargo, charging for the inspection.

And then should there be a VAT or income tax refund, SARS will burden the business with endless audit questions. No wonder nine out of 10 ventures fail. Once the business employs 50 employees, job reservation (“employment equity”) applies. More red tape.

As I type this, I am wearing a shirt made in Mauritius where the company tax varies between 3% and 12%. US President Donald Trump and British Prime Minister Theresa May are both committed to lowering their corporate taxes to 15% in line with Singapore, Switzerland, Ireland and other successful economies.

Until we create a free-enterprise economy with a small, efficient government, the growth of entrepreneurship is a pipe dream.