SMMEs should be assisted to be tax-compliant, not given a free pass

8 August 2024

The Democratic Alliance (DA) notes a series of extraordinary posts on X (formerly Twitter) by the Gauteng MEC for Economic Development, Lebogang Maile, regarding the tax status of a single business, Drip Group (Pty) Ltd. This business is facing liquidation, apparently due to not being tax-compliant. Contrary to what he claims in his posts, which go to significant length, he is making a public plea to the South African Reserve Bank (SARB) to save one single business.

The MEC is the executive authority for a government agency called the Gauteng Enterprise Propeller (GEP), which is responsible for providing financial advice to businesses. This would include the need to seek tax advice and direct businesses where to get assistance to keep their tax affairs in order.

In Maile’s posts, he questions a process that he describes as "punitive." We agree with him when he says that the investigative process should not take as long as two years. Indeed, the DA is also concerned about the plight faced by this company as well as many other small businesses. While we also want clarity on whether SARB invoked a sudden death liquidation or offered alternative arrangement, we do not believe that the answer must be the cancellation of a tax debt.

This week I have asked the Chairperson of the Gauteng Provincial Legislature’s Economic Development Committee to call the MEC to account for this matter. The Committee should seek the full facts and determine the following:

(a) Whether the MEC acted appropriately in this matter and;
(b) Whether businesses are indeed suffering hardship through SARB’s processes in such cases and whether the processes should be revised.

Maile’s public attacks on SARB are reckless as his actions could be construed as him seeking a write-off of tax debt owed by Drip Group (Pty) Ltd. Despite the MEC’s long string of posts, at the centre of it all is one company. This is odd.

If the Department of Economic Development was functioning properly, Maile could provide evidence to support his claims of many such businesses buckling under the reserve bank’s “punitive” actions. Who are they? What are their stories?

Much of South Africa’s tax revenue goes to the millions of poor people in our country. By implicitly calling for a write-off, MEC Maile is essentially depriving poor people of essential government services.

He places the burden on getting SMMEs to understand the depth of tax laws on SARB. But nowhere does he criticise his own agency, GEP, which consumes taxpayer money to achieve precisely that. He is tacitly conceding that they have failed Drip Group and all the other township-based SMMEs he claims to be advocating for.

If the DA was in charge, we would ensure that emerging SMMEs, whether from the townships or elsewhere, would get all the advice and support they need to flourish and be tax compliant. We would seek that all tax revenues are duly collected and correctly spent. Critically, we would ensure that Gauteng has an environment conducive to the flourishing of businesses. As a result, more jobs would be created, and better services would be provided.

Issued by Mike Moriarty, DA Gauteng Shadow MEC for Economic Development