Billions set aside to save jobs and revive economy as coronavirus bites
The government will introduce a R200bn loan guarantee scheme in a bid to assist enterprises with operational costs such as salaries, rent and the payment of suppliers.
The scheme was in partnership with major banks, the National Treasury and the SA Reserve Bank.
This is one of the key interventions announced by President Cyril Ramaphosa on Tuesday as he detailed the R500bn social and economic stimulus package to respond to the economic crisis caused by the coronavirus lockdown.
Ramaphosa said in the initial phase, companies with a turnover of less than R300m a year will be eligible, but it is expected that the scheme will support over 700,000 firms and more than three million employees through this period.
A number of the banks are ready to roll out the product before the end of the month, the president said, and the government is also working on additional support measures for vulnerable and affected sectors, including the taxi industry.
“In addition to existing tax relief measures, we will also be introducing a four-month holiday for companies’ skills development levy contributions, fast-tracking VAT refunds, and a three-month delay for filing and first payment of carbon tax,” he said.
To assist a greater number of businesses, the previous turnover threshold for tax deferrals is being increased to R100m a year, and the proportion of pay-as-you-earn (PAYE) payment that can be deferred will be increased to 35%.
Ramaphosa said businesses with a turnover of more than R100m a year could apply directly to Sars on a case-by-case basis for deferrals of their tax payments.
He said no penalties for late payments will be applicable if companies can show they have been materially negatively affected in this period.
On top of this, taxpayers who donate to the Solidarity Fund will be able to claim up to an additional 10% as a deduction from their taxable income.
“In total, these tax measures should provide at least R70bn in cash flow relief or direct payments to businesses and individuals,” he said.
Finance minister Tito Mboweni will provide further details on these and other tax-related announcements, said the president.
Ramaphosa said an additional R100bn would be set aside for protection of jobs and to create jobs.
Since the declaration of a state of national disaster over a month ago, the government has put in place a range of measures to support workers’ wages and assist companies in distress.
By Tuesday, the Unemployment Insurance Fund's special Covid-19 benefit had paid out R1.6bn, assisting over 37,000 companies and 600,000 workers.
A further R40bn has been set aside for income support payments for workers whose employers are not able to pay their wages.
“We continue to provide assistance — in the form of loans, grants and debt restructuring — to SMMEs, spaza shop owners and other informal businesses. The value of this assistance to date is over R100m,” he said.
He said the Industrial Development Corporation (IDC) facility to support companies to procure or manufacture personal protective equipment has also been used in the past few weeks, with about R162m approved to date.
Other forms of support have been extended to artists, athletes and technical personnel, as well as to waste pickers and public works participants in the environment sector.
“While these measures are providing obvious relief to many companies and workers, it is clear that there is a far greater need across the entire economy,” he added.