Counting the Costs of the Recent Unrest in SA

President Cyril Ramaphosa, in his address to the nation last evening, announced a broad-based range of measures designed to assist businesses that have been hit, not only by the Covid pandemic, but also by the recent unrest (to read civil disobedience, lawlessness, and opportunism) in both KwaZulu-Natal and Gauteng.

Deliberate, planned, and coordinated acts of violence designed to create the conditions for unrest led to the loss of more than 300 lives, the looting of shops, warehouses, and factories, damage to critical infrastructure, and disruption of the country’s economy.

Copyright 2021 BBC News

"We are still counting the cost of this violence and coming to terms with the destruction that it left in its wake. We have a duty to support those affected by this violence and (must) ensure that it never happens again," said the President.

Whilst many businesses are expected to be compensated by the state-owned SA Special Risk Insurance Association (SASRIA), which covers damage to property as a result of social unrest, many smaller businesses were not insured.

The President announced that Government would provide assistance to these businesses, including informal businesses, and said that Government had set aside monies for this purpose. Mechanisms to assist these businesses would be announced soon.

“Many of these businesses have lost everything and will not be able to rebuild on their own. We will not abandon them in their time of need,” the President said.

He also announced a wide range of other measures to assist businesses recovery during the pandemic:

Business survival payments

Small and medium-sized businesses affected by the pandemic would have access to a "once-off business survival" payment. Details of how this funding mechanism would work have, however, not been announced as yet.

Employment tax incentives

The Employment Tax Incentive (ETI) would be "expanded" for a period of four months.

The ETI, which has been in place since 2014, encourages businesses to employ employees by giving them a Pay-as-You-Earn (PAYE) tax refund.

Qualifying employers receive R1,750 per month from the SA Revenue Service (SARS) in the first year of employment for every employee younger than the age of 30 and earning less than R6, 500 per month, and R1, 250 per month in the second year of employment. This is achieved by claiming refunds on the amount of PAYE the employee pays over to SARS.

After 24 months, the incentive is R750 for these employees. The incentive is also R750 if an employee is older than 30.

"This will encourage employers to hire and retain employees, especially those in the retail and hospitality sectors which have been worst affected”, said President Ramaphosa.

PAYE deferment

Payment of PAYE taxes will be deferred for a period of three months to provide businesses with additional cash flow, with an automatic deferral of 35% of PAYE liabilities for employers with revenue below R100 million.

Social Relief of Distress Grant

The Social Relief of Distress Grant (SRD) would be reinstated and will be extended to March 2022. The SRD ceased making payments in January 2021 after having paid out in excess of R16 billion to approximately 6,5 million SRD recipients.

The grant of R350, administered by the South African Social Security Agency (SASSA), would also be extended to unemployed Caregivers who currently receive child support grants. Previously, anyone who received support from the state was ineligible for SRD payments.

Excise tax ‘holiday’

Whilst announcing the end of the fourth alcohol sales ban last night, the President announced that the payment of excise taxes by the alcohol sector would be deferred for a period of three months, "to ease the burden on the sector as it recovers".

Commitment by Government

President Ramaphosa said the aforementioned interventions were designed to extend as much relief as possible to individuals and businesses that are in need of support, without compromising South Africa's fiscal sustainability. He hinted that further initiatives "to address poverty, accelerate the implementation of reforms, drive inclusive growth and create jobs" were planned. "We will shortly be able to make further announcements in this regard."

We await these further announcements with eager anticipation.

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