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South Africa’s new smoking rules are a job killer in plain packaging.

Reference: Published by Luke Fraser (BusinessTech), 18 September 2023

New smoking laws for South Africa – a job-killer in plain packaging – BusinessTech

More public hearings on the new Tobacco Products and Electronic Delivery Systems Control Bill have been held by the Portfolio Committee on Health, with attendees expressing mixed feelings.

Depending on the clauses under consideration, the new Bill has received both support and severe criticism.

The following are the broad objectives of the bill:

  • Indoor public locations and some outdoor areas will be declared smoke-free.
  • Cigarette vending devices must be prohibited.
  • Plain package with health warnings and illustrations.
  • Display at the time of sale is prohibited; and
  • Electronic nicotine delivery devices and non-nicotine delivery systems are regulated and controlled.

The Committee held three public hearings in Limpopo, in Polokwane, Louis Trichardt, and Tzaneen, and the attitude to the Bill was mixed, as it had been in the North West, with widespread concerns about the Bill’s economic implications.

The following is a summary of the responses from the three public hearings:

Jobs

Informal traders say the new legislation will compel them to close their enterprises, raising South Africa’s unemployment rate.

They were particularly concerned about the strong penalties for selling single-stick tobacco products, which might result in a fine, jail for up to ten years, or both.

The high fines for the sale of single-stick cigarettes, as well as the potential impact on developing tobacco farmers, were also raised by public participation.

Plain packaging

Those opposed to the Bill also claimed that standardizing tobacco packaging and labeling would reduce job prospects in the advertising industry.

Opponents said that the new simple packaging will encourage the underground cigarette market.

Those who supported the Bill, on the other hand, claimed that prohibiting attractive packaging would eventually lead to a decrease in tobacco product consumption.

Inadequate capacity

Members of the public raised concern about the state’s failure to implement current tobacco legislation due to a lack of capability.

Those who opposed the bill claimed that drafting a new bill without first making the current one work was a waste of time.

They advocated for stricter adherence to existing laws before enacting new legislation.

Electronic delivery methods

Provisions relating to vaping and e-cigarettes were met with a more positive response.

There was widespread agreement that the Bill closes regulatory gaps and ensures that consumers are aware of the adverse impacts of these items.

Those opposed to the Bill, on the other hand, claimed that all tobacco products are unique and that electronic delivery systems should be governed differently.

However, proponents of the Bill criticized tobacco and electronic delivery system manufacturers, claiming that profits were more important than people’s health.

Security precautions

Participants at all three public hearings emphasized that the Bill will ultimately help safeguard nonsmokers, children, and pregnant women from smokers.

There has been considerable concern that school-aged children were missing crucial teaching and learning time by leaving class to smoke, with high hopes that the new Bill will assist parents in preventing their children from smoking.

Supporters of the Bill also claimed that it would protect nonsmokers from secondhand smoke.

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More alcohol restrictions are being advocated for in South Africa, including smaller bottles and higher costs.

Reference: Published by Staff Writer (BusinessTech), 8 September 2023

Call for more alcohol restrictions in South Africa – including smaller bottles and higher prices – BusinessTech

South Africans enjoy alcoholic beverages, with half of the population drinking alcohol at some time in any given month, but health experts say this is a major worry that necessitates considerable adjustments in the pricing, advertising, and availability of these beverages.

According to the most recent Eighty20 research on consumption and spending in South Africa, the country ranks fifth in the world in terms of per capita consumption of alcohol.

According to the survey, men use more alcohol than women, with 62% drinking some type of alcohol weekly or monthly, compared to 36% of women.

The South African Medical Research Council (SAMRC) has stated that this must change. According to Professor Charles Parry of the SAMRC, alcohol misuse is the sixth leading cause of mortality and disability in the country.

He went on to say that the measured consumption per capita in South Africa is five drinks per drinker per day, and that many people don’t drink this much, implying that others are drinking even more.

According to study, if every person in the country drank at a moderate or intermediate level, they would only drink around 32% of the amount of alcohol that we currently consume.

Apart from societal and economic factors, Parry believes that South Africa has a drinking problem because alcohol is too cheap, advertising is aggressive, and it is too widely available (typically supplied at unregulated outlets 24 hours a day).

Parry stated that industry stakeholders believe that education is the best approach to handle these concerns, but he believes that they should just stop producing so much alcohol.

For example, he claims that South African brewers have adequate production capacity to offer four 330ml cans of beer to every beer drinker in the country every day.

“This is a substantial amount, and it’s unnecessary,” Parry added. He went on to say that the same is true for the wine sector, where there is a surplus of supply, including big amounts sold for very low prices.

Parry also stated that the size of the bottles in which beverages are marketed and how alcoholic beverages are advertised ought to be changed.

“Research has found that when people drink out of larger containers, they tend to drink more over the course of an occasion,” he explained.

Furthermore, he stated that tougher marketing laws are required, noting that alcohol should never be sold in a romanised manner, such as signifying success. “We can’t leave it up to the industry to fix it,” he said.

As a result, Parry believes the industry should refrain from opposing the health authority’s and government’s efforts to limit the harm caused by drinking, which should include:

  • Price rises; 
  • tighter advertising controls; and 
  • alcohol availability restrictions.

“A good example is the Covid-19 pandemic, where alcohol control resulted in significant savings in lives and trauma, as well as taxpayer money in hospitals.”

“The only thing that comes from industry pushback is onerous court battles that cost all of us taxpayer monies,” Perry added.

“We frequently see the alcohol industry interfering with policy processes, and this must stop.” “The economic costs of alcohol abuse are likely to far outweigh the economic benefit to the country from the excessive sale of these beverages,” he continued.

According to Perry, the economic costs of alcoholism include lost productivity, death, government medical bills associated with drinking-related injuries, increases in gender-based violence, deterioration of school performance in young drinkers, and its association with mental health issues.

As a result, the SAMRC has urged the government to take extreme measures, including the implementation of new legislation.

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More alcohol restrictions are being advocated for in South Africa, including smaller bottles and higher costs. Read More »

South African businesses are turning the tables.

Reference: Published by Luke Fraser (BusinessTech), 5 September 2023

Tables turn for businesses in South Africa – BusinessTech

In August, South African business activity increased for the first time in a year, with the latest S&P Global South Africa Purchasing Managers’ Index (PMI) returning to positive territory after months below the line.

The PMI is a composite indicator of the private sector’s operating conditions. It increased from 48.2 to 51.0 in August.

This is the first time in six months that the PMI has risen beyond the neutral 50-point market level.

“The August South Africa PMI pointed to an encouraging turnaround in the private sector economy midway through the third quarter, as companies reported an increase in output for the first time in a year and demand conditions were broadly steady,” said David Owen, Senior Economist at S&P Global Market Intelligence.

“While inflationary pressures continued to sap customer spending power in many areas, there were hints that order books may be starting to improve, leading firms to make concerted expansion efforts.”

Despite significant increases in wages and material prices, the recovery in output enabled businesses to hire more workers and purchase more goods. The surge in layoffs is due to firms’ need to boost capacity and reduce work backlogs.

Despite the fact that new order inflows fell for the fourth month in a row due to load shedding and the cost-of-living issue, the newest statistics revealed that the drop was the weakest in the series.

Several companies also reported a rise in customer numbers and a revival in domestic demand. Export sales, on the other hand, fell somewhat in August.

There was nevertheless good news for inflation, as business costs rose at their slowest rate since January, resulting in a slower increase in a firm’s output charges.

Price pressures maintained, however, as a result of the rand’s weakness, wage hikes, and supply concerns, which were compounded by the Cape Town taxi driver strike.

Companies also witnessed a modest gain in input stores during August, while inventories fell during the previous four months. This expansion occurred despite a significant deterioration in supplier performance.

Looking ahead, South African firms remained optimistic about future activity, despite a modest drop from a nine-month high in July.

Firms were confident about increased demand, lower inflation, and a reduced impact of load shedding on their operations.

However, Owen cautioned that the August improvement should not be overblown.

“August’s rebound does little to turn the tide after a dismal start to 2023.” “Load shedding, supply disruption, and currency weakness continue to stymie firms and have an impact on demand,” he said.

“Progress on these issues would undoubtedly benefit South African businesses in the latter part of this year.”

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There are 8 issues worrying South African businesses.

Reference: Published by Staff Writer, 17 February 2023

https://businesstech.co.za/news/business/665485/8-things-stressing-out-businesses-in-south-africa-right-now

Companies are fretting about load shedding and mounting economic instability in South Africa, an SNG Grant Thornton study finds, with many being forced to close their doors due to the rising cost of energy.

Almost 100 corporate leaders in South Africa, including CEOs, managing directors, chairpersons, and other top decision-makers from diverse industries, participated in the study.

Companies identified the excessive frequency of load shedding and the ensuing increase in operating expenses as their top concern.

Due to load shedding and the high cost of diesel, energy costs are a major concern for 74% of South African mid-market enterprises, compared to 47% of respondents before the COVID 19 outbreak.

According to 67% of respondents, this is another major worry for the nation. The research also indicated that overall economic uncertainty increased dramatically over the first half of 2022, rising 11%.

After the worsening state of the transportation infrastructure (54%), labor expenses were identified as the third major worry (57%).

Load shedding and rising energy prices have pushed many enterprises to shut down, which has a negative impact on sales and disrupts the supply chain. According to Yugen Pillay, director of business consulting at SNG Grant Thornton, this had an even greater impact on the already high unemployment rate and budgetary restrictions.

The study found that load shedding caused unnecessary downtime for enterprises as they looked for alternatives such backup generators, uninterrupted power supplies (UPS), and solar power options.

According to Pillay, businesses are experimenting with alternative energy sources, but doing so has come at an additional cost. This is particularly true for generators, which use diesel, a commodity whose price has significantly increased as a result of the global oil market’s upward trend, which is being driven by geopolitical concerns.

Some of the largest enterprises in the nation are suffering from the severe consequences of load shedding; retail chain Pick n Pay estimated that it costs R60 million per month to keep diesel generators running and the lights on in its outlets nationwide.

According to the merchant, load shedding is now a constant reality that businesses must adapt to or risk losing money.

The cost of Shoprite’s diesel to keep the lights on, meanwhile, was estimated to be over R3 million per day.

During the next 12 months, SNG Grant Thornton expects the outlook to improve, particularly in terms of investment and economic conditions. The dangers to the economy are, nonetheless, negative.

Following Eskom’s announcement that load shedding would become a permanent feature of the nation, the South African Reserve Bank (SARB) reduced its economic growth projection closer to zero on January 26 from 1.1% to 0.3%.

The expectation of South Africa’s economic growth for the following two years has also been drastically reduced by the central bank. Forecasted growth rates have been cut in half for 2024 and 2025, from 1.4% to 0.7% and 1.5% to 1.0% respectively.

The message is consistent across industries: if South Africa wants to see economic growth, it must immediately address load shedding and the broader energy crisis.

In an effort to address this, President Cyril Ramaphosa proclaimed a state of calamity over the energy crisis during last week’s State of the Nation Address (9 February) in an effort to further reduce red tape and expedite projects to address the energy crisis.

However, the public has strongly opposed this choice due to worries that it will encourage more “tenderpreneurship,” as was evident during the pandemic. The action is being contested in at least three different legal cases.

Additionally, the president declared that he would name a “minister of energy” to the presidency whose primary duty would be to address load shedding and the energy problem.

This has also encountered opposition.

Companies have voiced their dissatisfaction with the president’s promises and lack of action, and ratings agencies have taken notice, raising questions about whether the national government will be able to change its history and truly carry out the promised reforms.

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Reasons why you require a tax-free investment

Reference: Published by Partner, 15 February 2023

Here’s why you need a tax-free investment

A tax-free investment is a no-brainer given its benefits, but by managing it strategically, you can increase its value. Now is the ideal moment to invest and maximize your benefits because the tax year ends on February 28, 2023.

The benefit of a tax-free investment that stands out the most is that you don’t have to pay any local taxes on your investment returns, either while you’re investing or when it pays off. Your interest income, dividends, and capital gains are all free of municipal taxes.

While the government has provided all South Africans with access to this wonderful advantage, we think the real value resides in knowing how to maximize your tax-free potential. According to our analysis, over the long term, using four essential tactics, you might quadruple the returns on a given taxable investment.

Strategy 1: Observe the first-in, last-out rule.

When we say “first-in,” we mean to use your tax-free limit first before deciding on any other type of investment. You can start investing with Coronation with as little as R250 per month or an annual lump sum of R5,000, up to a maximum contribution of R36,000.

By “last-out,” we mean to keep investing over the long haul. With every additional decade that you remain invested, the force of compounding allows your investment to potentially expand tenfold. By avoiding the need to access or withdraw the money you’ve deposited in a tax-free investment, we think you may fully benefit from tax-free investing.

In other words, don’t use it as a savings account for major purchases like a car or holidays or an emergency fund.

Strategy 2: Invest in a multi-asset fund that emphasizes growth.

It’s crucial to realize that restrictions on geography or asset classes do not apply to tax-free investments, which means that long-term investors may want to explore investing entirely in stocks. The highest predicted returns are offered by this asset type over the long term.

To navigate market ups and downs across several decades, a less volatile experience could be desired for the majority of investors. As a result, selecting a growth-oriented multi-asset fund like Coronation Market Plus is your best bet for staying invested and generating returns that are significantly higher than inflation.

Since its launch in 2001, Coronation Market Plus has catered to the demands of risk-takers looking to increase their long-term capital outside of retirement portfolios.

As seen in the graph below, Coronation Market Plus has generated an annualized return of 14.3%, which is significantly higher than inflation, which is now at 5.7%.

It is noteworthy that, during this time, the Fund has beaten the 13.7% performance of the JSE All Share Index, despite never having a 100% equity investment. (All performance data is as of December 31, 2022).

Strategy 3: Try to hit your lifetime cap as quickly as you can.

Your yearly tax-free investment limit, which is presently R36 000 per year and R500 000 per taxpayer in total, should be used as soon as feasible, according to history. By doing this, you can extend the time over which you can profit from compound growth by allowing the taxes you avoid to stay invested for a long time.

The higher rate of compound growth on your tax-free investment is what makes it so much more potent than an investment in a taxable unit trust. This can double the value of your investing nest egg over the greatest feasible time span, as explained in Strategy 4 below.

Strategy 4: Create riches for your young children.

A hypothetical example (see figure below) that highlights its potential if used on your child’s behalf as early in life as feasible can help you better grasp the life-changing impact a tax-free investment can have on their lifetime.

Consider making the maximum annual contribution for your child (R36 000) in a tax-free investment from the time of the child’s birth. Before your child reaches the age of 14, you will have spent the entire lifetime limit of R500,000.

According to our study, which is predicated on a few assumptions, the value of the tax-free investment will be 22% more than the equal taxable unit trust investment if you hold onto the funds there until your child becomes 18 years old. By the time you reach age 30, the gap increases to 42%, and by the time you reach age 65, the investment will be worth significantly more than the equivalent taxable unit trust investment.

These findings demonstrate that by resisting the urge to withdraw money from a tax-free investment, a nest egg is created, which, depending on when your child decides to withdraw, might be used to pay for university education, purchase a first home, or, ideally, invest in retirement.

The amazing potential of compounding over extended periods is clearly demonstrated by this theoretical exercise. An investment worth R17 million in today’s money can be made by age 65, for instance, by investing R500 000 over the course of 14 years and then doing nothing for 41 years.

Start your adventure with Coronation right away if you don’t already have a tax-free investment.

As we can see, there are many advantages to investing tax-free. But what’s most important is that you take the tactics into account to maximize your investment. Therefore, why Coronation?

  • By opening a tax-free investment with Coronation, there are no setup or administrative fees involved.
  • Start investing with us today for as little as R250 via a monthly debit order, or contribute one big payment of R5,000 to R36,500 annually.

Contact your financial advisor, if you have one, or visit the tax-free investment website by the end of February 2023 to choose the funds that best meet your needs.

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Illegal Buildings and Demolition Orders

The approval of construction designs is more than just a formality in municipal planning, and adherence to building codes increases public safety. A fait accompli caused by the landowners’ illegal conduct should not be presented to the authorities by the courts by allowing them to erect illegal structures on their property. (Excerpts from the verdict below)

What would you do if your neighbor began constructing there without getting approval from the municipality? Your right to request demolition has been upheld by a recent High Court judgement.

The retiree who unlawfully constructed an apartment complex

  • A landowner made the decision to erect an eight-apartment, multi-story building on his property. He is a retiree, according to the media, who spent his R900,000 pension cheque on the project and intended to live off the R40,000 monthly rent that resulted.
  • The structure, which he said would only be a garden cottage for his neighbors, violated four laws:
    • The local Council did not accept any building plans,
    • The construction violated the Town Planning Scheme’s building line limits,
    • The building did not adhere to the property’s zoning;
    • The owner was building a second home on the land, which violated a restriction in the title  deed that only allowed one to exist there.
  • The owner disregarded two “stop building” directives from the Council. Then he promised to stop the work but ended up speeding it up.
  • After receiving an urgent application from two of his neighbors asking the High Court to halt further construction, the Court ordered the owner to tear down the structure.
  • The owner filed an appeal of this decision with the High Court’s “full bench,” requesting that the demolition order be delayed while his application for rezoning and the removal of the restrictive covenants with the Council was being processed.
  • Despite the Council’s approval of the property’s rezoning, it was made clear that it did not support the partially completed building, which was against the law because it crossed over the building lines without having its plans approved.
  • Although their land had not been encroached upon, the neighbours’ rights had, the Court determined, giving them the right to apply for a demolition order.
  • The Court recognized that the neighbors had taken action to preserve their rights as soon as it became clear that the owner was building an apartment block rather than a garden house when it decided to exercise its discretion in favor of demolition. They informed the Council of the illegal structure, and the Court found it strongly persuasive that the owner continued construction despite being aware of its illegal status.
  • The building must be demolished by the owner.

The bottom message is to act right away if your neighbor starts to construct illegally!

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How to Choose the Appropriate Legal Entity

If starting a business on your own in 2023 is something you’ve always wanted to do, consider these factors first:

  1. Am I a businessperson? You’ve got a fantastic business idea, and you can’t wait to start it up. Success and fortune are calling. But hold on, are you really cut out for the hustle and bustle of entrepreneurship? It can be extremely lucrative, not only in terms of money but also in terms of lifestyle and overall well-being. But it also entails a great deal more risk than the traditional “9 to 5 employee” alternative, so carefully consider your options.
  2. What’s my strategy? Without a strategy, you navigate through dangerous, shark-infested waters without a rudder. Although there is a lot of advice available to assist you chart your route, start-up failure rates are high.
  3. Which legal organization ought I to use for business? Avoid making the beginner error of setting sail in any old boat. Starting in the wrong entity and having to switch in the middle of operations will result in a lot of needless expenditure, hassle, and risk. Instead, make long-term plans. Consider where you want your company to be in five or ten years, its size, your exit strategy, and other factors.

So what options do you have?

You have four primary choices. –

  1. A single-person business (a “sole trader”). You are the company, conducting business for your own gain or loss, possibly using a trading name like “Syd Smith trading as “Syds Plumbing”.”
  2. A group of two to twenty people or entities who pool their resources to operate a trade, business, or profession in exchange for a cut of the earnings.
  3. A privately held corporation (“Pty Ltd”) with any quantity of stockholders. Directors have control over and are in charge of.
  4. A trust (number of trustees and beneficiaries not restricted). There are various types of trust, with trustees controlling and managing trust assets and/or trading for the benefit of beneficiaries.

Noting that there are other specialized types of entities available to, for example, non-profit organizations (charities, etc.), professionals (lawyers, accountants, doctors, etc.), and the like, it should be noted that you might be advised to combine one or more of these entities in a corporate structure.

Each’s advantages and disadvantages

For a description of the benefits and drawbacks of each of these choices, look at the example table below.

Remember the effects on taxes and estate planning!

Briefly stated:

  • Estate planning: You might be encouraged to utilize trusts and corporations to transfer money to future generations in a way that is both tax-efficient and practicable, as well as to shield your assets from creditors both now and after you pass away. Both corporations and trusts are “perpetual” in the sense that they endure changes in directors or trustees (resignation, removal, retirement, insolvency, death, etc.), with the potential to save money on estate taxes over multiple generations and avoid the expenses and delays associated with administering a decedent’s estate.
  • Tax efficiency: Partnerships and sole proprietorships are taxed at individual rates; trusts other than special trusts are taxed at a flat rate of 45%; businesses are taxed at a flat rate of 27% (down from 28% starting with assessments ending on March 31, 2023), plus 20% dividends tax when profits are distributed. There are a number of other considerations to make in this case, including things like Capital Gains. Tax inclusion rates, exclusions, exemptions, small company benefits, and the “trust conduit concept” are all very important when determining whether you would be better off paying taxes as an individual or through a corporate or trust structure.

Take that advise from a professional!

    Remember the effects on taxes and estate planning!

    Briefly stated:

    • Estate planning: You might be encouraged to utilize trusts and corporations to transfer money to future generations in a way that is both tax-efficient and practicable, as well as to shield your assets from creditors both now and after you pass away. Both corporations and trusts are “perpetual” in the sense that they endure changes in directors or trustees (resignation, removal, retirement, insolvency, death, etc.), with the potential to save money on estate taxes over multiple generations and avoid the expenses and delays associated with administering a decedent’s estate.
    • Tax efficiency: Partnerships and sole proprietorships are taxed at individual rates; trusts other than special trusts are taxed at a flat rate of 45%; businesses are taxed at a flat rate of 27% (down from 28% starting with assessments ending on March 31, 2023), plus 20% dividends tax when profits are distributed. There are a number of other considerations to make in this case, including things like Capital Gains. Tax inclusion rates, exclusions, exemptions, small company benefits, and the “trust conduit concept” are all very important when determining whether you would be better off paying taxes as an individual or through a corporate or trust structure.

    Take that advise from a professional!

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    What you should know about South Africa’s strict new transformation legislation that will take effect in 2023

    As it gets ready for new transformation legislation to take effect in the nation this year, the Department of Employment and Labour has issued a warning to businesses about the impending deadline for employment equality reporting.

    According to the agency, authorized firms must submit their annual Employment Equity (EE) reports for 2022 by midnight on January 15, 2023. Businesses could incur fines and other penalties if they don’t, according to the statement.

    The Employment Equity Act of 1998 specifies that annual equity plans must be submitted.

    According to the Employment Equity Act, employers are required to submit their EE reports, which must include the required data and be signed by the designated employer’s chief executive officer.

    Through the elimination of unjustified discrimination, the implementation of affirmative action measures to address the disadvantages in employment experienced by designated groups, and ensuring their equitable representation in all occupational levels of the workforce, the Employment Equity Act promotes equal opportunity and fair treatment in the workplace.

    The agency noted that the year in which the revised EE laws is anticipated to go into effect following the amended EE Bill’s passage is the same year in which the revised EE report plans are due.

    On May 17, 2022, the Employment Equity Amendment Bill, 2020 was approved by the National Assembly and National Council of Provinces. President Cyril Ramaphosa will now have to ratify it and sign it into law.

    September 2023 is the anticipated implementation date for the new laws.

    The amendments’ primary goals are to provide the Employment and Labour Minister more authority over sector-specific EE targets and compliance standards so that she can issue EE Compliance Certificates in accordance with Section 53 of the EE Act.

    This implies that organizations, particularly those who have business with the government, will need to be in good standing in terms of EE compliance.

    The term “designated employer,” which refers to the companies that must file items like EE reports, is a critical component of the legislation revisions, according to legal experts, as it is these employers that the regulations specifically address.

    According to the existing law, a “designated employer” is defined as either a company with 50 or more employees or an employer with fewer than 50 employees who, depending on the industry, has an annual turnover that is equal to or higher than the criteria established by the EE Act.

    Since firms with less than 50 employees, regardless of their yearly turnover, are no longer included in the designated employer definition and are consequently free from compliance, the designated employer definition has changed under the modified bill.

    The fact that these businesses will not be compelled to take action to guarantee that adequately qualified individuals from designated groups have equal employment opportunities and are represented at all occupational levels in the workplace marks a significant change.

    The ability of the employment and labor minister to control sector-specific EE targets and compliance requirements, however, is the reform that will have the most impact on the large corporations that meet the description of a designated employer.

    This indicates that the minister will have discretion over the EE targets for certain sectors. Although these goals are not yet known, designated employers must closely monitor the regulations the minister enacts since they will have a substantial practical impact on how they comply with the act.

    Businesses must abide by the law even if they don’t necessarily do business with the government directly.

    Thembinkosi Mkalipi, acting deputy director-general of Labour Policy and Industrial Relations, announced that a new EE online assessment system would be developed to track the accomplishment of sector targets. The assessment will be carried out once a year.

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