Western Cape Business News

Send  Share  RSS  Twitter  13 Sep 2010

FINANCES: New Business Tax Questioned


Recent Western Cape Business News

The Cape Chamber of Commerce says it's extremely disappointed to hear that the City Council is once again planning to introduce a new tax on business to replace the discredited and discarded RSC levy.

We have already told the City Council that we will resist any new tax on business,” said Mr Joe Emeran, President of the Chamber. “We feel that business is already paying more than its fair share and any new tax would be counterproductive.”

He pointed out that rates on commercial properties were double those on residential properties and the city had just imposed huge mark-ups on the price of electricity in defiance of the National Energy Regulator. These increases would be particularly hard on small business, the main creator of new jobs.

As an example Mr Emeran pointed out that the price of electricity to a small business using about 1 000 Kw/h a month had increased by nearly 24 cents a unit after Eskom Tariffs had been increased by just eight cents a unit. At present small businesses were paying 29 percent more for electricity than residential customers using the same number of units each month.

He pointed out that salaries, wages and benefits in the municipal and public sector were now higher than those in the private sector. Where many businesses had been forced to retrench staff, work short time and endure wage freezes to survive the recession, municipal increases this year were more than double the rate of inflation.

To use an old proverb, we believe that the Council should cut its coat according to the cloth and make do with its present sources of income.

Unfortunately we seem to have a council that wants to take over the running of all public transport as well as the Table Mountain and Cape Point Nature reserves. There may well be arguments in favour of these moves but the financial risks will increase as the Council moves out of its area of expertise. In particular, the venture into public transport would require huge subsidies and the losses could be substantial.”

At the same time there was no indication of a tightening of municipal spending. As an example he pointed out that the City Council traffic cops were now using 1 300cc Honda motorcycles which cost R148 000. “For R65 000, less than half the price, the City could use the Honda 600cc machines, good, powerful all-purpose bikes that could out-perform any car.”

Since the traffic department operated only in the municipal area, most of their travelling would be at speeds between 60 km/h and 80 km/h with the occasional burst on a Freeway, but the 600 cc bikes had a top speed of 220 km/h. It was rather like sending health inspectors and social workers out on their rounds in huge V8 sedans!

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