Investment ambassadors can try, but SA company losses exceed taxable income

Pres Ramaphosa’s announcement that four special ambassadors – including well respected Trevor Manuel – are to roam the globe in an aggressive pursuit of foreign investment  “… like a pack of lions”, appears to be premature. It would have helped these ambassadors if they could have had a better story to tell than one of a business environment with stagnating profitability and growing losses where:

  • only 25% of firms have earned sufficient to be liable for company tax;
  • firms with a taxable income below R10 million decline at a rate of 31 per week;
  • a mere 635 companies are responsible for 77% of company tax;
  • from 2009 to 2015 company losses as submitted to SARS increased by 85% and for the last two years were higher than the taxable income assessed.

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Continue reading “Investment ambassadors can try, but SA company losses exceed taxable income”

The economic consequences of Luther: Ideas have legs, but some come with leg-irons

500 Years after Martin Luther hammered his 95 theses to a church door in Wittenburg, Davide Cantoni, Jeremiah Dittmar and Noam Yuchtman saved their theses to the internet: Beliefs have economic consequences.

Old news, one might say, recalling Weber. But Weber’s thesis was always contested: assumptions of cultural traits based on unreliable statistics from the 19th C. Cantoni, Dittmar and Yuchtman (further-on Cantoni and co.) offer hard micro-statistical evidence from the century when Luther protested against Papal authority : 1517 was a watershed year in how people viewed the world and those (world)views had economic consequences.

In a National Bureau of Economic Research Working Paper of October 2017 they state: “the pre-Reformation era can be understood as an equilibrium in which a monopolist religious producer (the Catholic Church) provided political legitimacy to secular authorities at a high price—charged in the form of control over resources, tax exemptions, and some degree of political power. The Reformation represented a competitive shock in the market for salvation. Protestant reformers offered a popular, lower-cost alternative to the Catholic Church… This had implications for the allocation of resources between secular and religious uses…Continue reading “The economic consequences of Luther: Ideas have legs, but some come with leg-irons”

Is the promotion of Black Businesses done by the blind?

Government is pursuing numerous strategies to promote black owned businesses, e.g.:

  • The 80 Black Industrialists’ programme;
  • The Gazelles Programme (fast growing small enterprises that should increase their turnover and growth much faster than the market average);
  • The Cooperative Incentive Scheme;
  • Preferential procurement programmes;
  • BBBEE-measures effectively forcing large and medium-sized companies to subcontract to black owned businesses;
  • Sector Charters;
  • Grants and SEFA loans;
  • Land Reform and Restitution;
  • The Free State Provincial Grants Scheme and numerous other provincial initiatives,

and the list goes on and on… Continue reading “Is the promotion of Black Businesses done by the blind?”