National Budget gives some relief to SMEs

SMEs have in the past been flagged as crucial to tackling unemployment and alleviating poverty in South Africa. The National Budget for the 2009/10 financial year supports this thinking.

Spending goes up, VAT comes down

The commitment to increase government spending in the SME sector, through various government projects (and even indirectly through business done with large corporates) will give a much-needed boost to smaller players in a range of industries.

If you are a VAT vendor, you also have reason to smile. The value-added tax (VAT) threshold has been increased to R1m (as opposed to the previous R300 000). This will make life a lot easier for many entrepreneurs currently bogged down by all the red tape, and also clears the way for many would-be small business owners to get their businesses off the ground.

Unfortunately, it can't be all good news and higher sin taxes, petrol prices and environmental levies cast a slight shadow on the horizon. But the benefits are enough to be excited about.

Indirect benefits

• Consumers will have deeper pockets due to income tax breaks ranging from 1.7% for low income earners to 31% for those earning the big bucks
• Government has allocated money to assist with the boosting of South Africa's energy infrastructure, with many projects in the pipeline all across the country
• The exclusion threshold for capital gains tax (CGT) has been increased to R17 500
• R45 billion more has been allocated to improve education, health, roads and rural development nationally
• R10.9 billion more will be spent on housing, water, sanitation and municipal services
• R6.4 billion more for public transport, national roads and rail infrastructure

While the year ahead is going to be a tough one for us all, we seem to be a lot better off than America and Europe, who are bracing themselves for negative economic growth. Here at home, growth will be slower, but there are still opportunities out there for entrepreneurs to do good business.