to view the full 'Brenthurst Initiative' - The Brenthurst Foundation

More documents

Recommendations

Info

Africans no longer see value in making economic distinctions based on race. Can we afford to do this? Perhaps the better question is: can we afford NOT to? Our aim must be to stimulate a level of growth that actually increases Government’s absolute fiscal revenues (i.e. overall Rand receipts), notwithstanding a reduction in the overall percentage rate of corporate tax. Many countries, including China, Ireland, Hong Kong and Malaysia, have been able to achieve an increase in fiscal revenue and a reduction in tax rates, using both direct incentives and reduced corporate tax rates. The worst-case fiscal cost is small, with substantial potential upside The downside risk is small. If we assume that 10% of firms already have a Good level of transformation (as defined in the Strategy for Broad-Based BEE), and that an additional 6% of firms achieve this level each year for the next 15 years, and that they subsequently benefit from a 10% reduction in their corporate tax rate, (9) then: • The average reduction in fiscal take would be 3.5% - 4% (equivalent to R9 Billion to R11 Billion per annum) • The reduction in fiscal take would be lower in the first page 25
years, allowing Government the scope to assess progress being made, and adjust the level of incentives as necessary to achieve the required impact • The reduction in fiscal take would be offset by an additional growth rate in GDP of just 0.5% per annum • Achieving fiscal neutrality would require investment as a percentage of GDP to increase by only 1.5% - 2.5% from the current level of 15% 3. Communicate and adopt a comprehensive plan to close the “BEE funding gap” Lack of availability of finance has been a major obstacle to black economic empowerment. It also undermines investor confidence in the sustained value of their investments, as the ability to achieve ownership transfer on a “fair value” basis is called into question. Owners fear that transformation may result in the transfer of assets on a non-economic basis. This fear is not entirely misplaced when simple numbers are considered. The required level of funding to achieve 26% black ownership (the target in the mining charter) of publicly quoted companies is over R220 Billion (10) at the current market capitalisation of the JSE (see Figure 5). page 26
Page 1 and 2: BRENTHURST DISCUSSION PAPER 8/2007
Page 3 and 4: INTRODUCTION By NICKY OPPENHEIMER E
Page 5 and 6: South Africa’s economic advanceme
Page 7 and 8: to transformation, could become an
Page 10 and 11: OUR UNIQUE CHALLENGE Effective tran
Page 12 and 13: And this is the nub of the challeng
Page 14 and 15: Fig. 2. Perceptions of risk constra
Page 16 and 17: Investors were reacting to what the
Page 18 and 19: measures aim to ensure that our app
Page 20 and 21: standards for transformation, appli
Page 22 and 23: China, for example, has used a mix
Page 26 and 27: Fig. 5. Sizing the BEE funding requ
Page 28 and 29: • Establishing incentives to crea
Page 30 and 31: What is certain is that inaction is
Page 32: Acknowledgement We would like to th

to view the full 'Brenthurst Initiative' - The Brenthurst Foundation

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?