Review of the impact of small business tax relief initiatives to encourage economic growth in South Africa

Abstract

Small businesses play an important role in economic activity and they can be a major contributor to job creation. The South African government has realised the importance of small businesses. Since 2001, they have introduced tax relief initiatives to encourage society to start their own businesses, which could have a positive impact on job creation. This study discusses the income tax relief initiatives introduced in South Africa, the objectives and practicality thereof. It analyses the effectiveness of these income tax relief initiatives as a tool to encourage small business activity. This study also discusses tax relief initiatives in China and the United States of America. This is then compared to South Africa. Conclusions were drawn on whether South Africa could apply any of these tax relief initiatives to its tax system. Conclusions drawn from this study are that South Africa has come a long way to encourage small business activity in South Africa. In comparison to other countries, South Africa seems to be committed to supporting small businesses and their policies are similar to those in other countries evaluated. AFRIKAANS : Klein ondernemings speel 'n belangrike rol in die ontwikkeling van ekonomiese aktiwiteite en hulle kan ‘n groot bydrae lewer tot werkskepping. Die Suid-Afrikaanse regering het die belangrikheid van klein besighede besef. Sedert 2001 het die regering belastingverligting inisiatiewe geloods om die gemeenskap aan te moedig om hul eie ondernemings te begin wat ‘n positiewe impak op werkskepping kan hê. Verdere belastingverligting inisiatiewe is sedert 2001 geloods. Hierdie studie bespreek inkomstebelastingverligting inisiatiewe in Suid-Afrika, die doelstellings en die praktiese uitvoerbaarheid daarvan. Dit ontleed die doeltreffendheid van hierdie inkomstebelastingverligting inisiatiewe as 'n instrument om groei in klein sake-aktiwiteite aan te moedig. Die studie bespreek ook belastingverligting inisiatiewe in China en die Verenigde State van Amerika (VSA). Dit word dan ook met Suid-Afrika vergelyk. Gevolgtrekkings was gemaak in verband met die moontlikheid of Suid-Afrika enige van die belastingverligting inisiatiewe kan toepas in hul eie belastingstelsel. Die gevolgtrekkings van hierdie studie is dat Suid-Afrika al ‘n ver pad gestap het in die aansporing van kleinsake-aktiwiteite in Suid-Afrika. In vergelyking met ander lande blyk dit dat Suid-Afrika toegewyd is tot die ondersteuning van kleinsake-ondernemings en dat hul beleid soortgelyk is aan die van ander lande wat ook geevalueer was. Copyright 2011, University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria. Please cite as follows: Ramusetheli, ML 2011, Review of the impact of small business tax relief initiatives to encourage economic growth in South Africa, MCom dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://upetd.up.ac.za/thesis/available/etd-03082012-133045 / > F12/4/160/gm