Auditing firm KPMG has laid out its 2012 Budget Speech wish list
for job creation.
Yasmeen Suliman, KPMG tax director, has called for more concrete
ideas on how to put the proposed job subsidy into place without
compromising existing jobs.
Another step that Suliman urged Finance Minister Pravin Gordhan
to adopt was more tax benefits (such as enhanced allowances) for
on-the-job training, as opposed to the more formal
Thirdly, Suliman called for a tax holiday for companies, local
and foreign, that expand existing or install new manufacturing
facilities that create more than 200 jobs.
"Many commentators agree that in order for South Africa to
grow its economy and reduce social ills, job creation and skills
development must be prioritised," she added.
"Currently the only tax benefit for employing more people
and developing skills lies in learnership allowances. While
leanerships do provide some good tax benefits it is arguable
whether they are sufficient to encourage employment and skills
development," Suliman said.
"Some of the drawbacks of learnerships is that the process
to register and train a learner is onerous, the tax benefit is only
be useful to employers should the employer be in a tax paying
position, and the cash impact of the benefit is only felt much
later when provisional tax payments are due. If the employer is not
an income tax payer or is in an assessed loss position, there is no
immediate cash benefit."
In the last two Budget Speeches, Gordhan made an announcement
that a job subsidy will be introduced to encourage the employment
of youth and unemployed, Suliman said.
In 2011 he mentioned that the subsidy would be administered
through the PAYE system.
"While details of the subsidy were not made available at
that time, it was envisaged that there would be a more immediate
cash flow benefit to employers who employed more people," she
"However, the problem is that announcements in the Budget
Speeches did not culminate in any amendments to legislation that
would give effect to the subsidy in practice," Suliman
"It is understood that trade unions were opposed to the
idea of a job subsidy on the basis that their membership would be
prejudiced and there was a fear that older employees would be
retrenched so that they could be replaced with younger employees
that did qualify for the subsidy," she added.
"One would think that any legislation that would have given
effect to the subsidy would also have contained anti-avoidance
rules that prevented the retrenchment of other employees - as an
example, the subsidy could have only been paid to employers who
could show that the absolute numbers of people they employed had
increased, and who could demonstrate that they had not retrenched
any existing employees."
This article first appeared in Inanda FM
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