South African business has an ethical obligation that goes beyond simply maximising profits – and the #FeesMustFall movement offers a cogent opportunity for small and big businesses to plough back into society.
That was the view of Rhodes University tax expert Professor Matthew Lester in a lively PWC presentation in East London on this year’s budget.
Lester highlighted far-reaching changes to the Income Tax Act as part of the budget, which raised the salary limits on employers providing tax-free bursaries to relatives of employees.
An employer can now fund a bursary of up to R40 000 a year for a relative of an employee who earns less than R40 0000 a year.
And referring to the pending mass retrenchments at local sweet factory Candy Tops, Lester told the Dispatch: “That’s all about profit.
“It’s got to change. Is there not a nicer way of doing that?”
Traditionally, the mantra recited by business was that its sole responsibility was to increase profit for shareholders.
And, while business must use every available incentive and benefit to its advantage, Lester said it was “absolutely not” only about the bottom line numbers, but about business’s ethical imperative to be socially responsible.
“When there is an incentive , it’s about the private sector doing something for the social good, not just to increase the bottom line,” Lester said. “It’s a philosophical issue. Years ago, philosophy used to be a first-year university subject for future business people.
“Today, you don’t teach philosophy and ethics. You teach more bean counting and more law.”
He said business owners needed to be trained in what corporate social investment (CSI) – one element of the triple bottom line (TBL) approach – actually meant.
Too often, CSI was manipulated into developing a company’s brand rather than to ensure benefits to society.
“A lot of corporate social investment is glorified advertising.”
On the tax-free bursary provisions in section 10(1)(q) of the Income Tax Act, Lester calculated that by raising the salary limit to R400000 for employees benefiting from a company’s bursary scheme, an additional 1.5 million working parents could be assisted to pay for their children’s higher education.
“All companies should strive to create in-house bursary schemes to ensure that lower income employees with children who deserve to be at university, be given the opportunity to get there.
“Every human resources manager in South Africa should be working on this,” he wrote in a blog post.
He told the East London breakfast presentation that wealthy parents with children at university had also effectively benefited by about R3000 per child as a result of the withholding of this year’s tuition fee increase, which contributed to inequality.
In addition, disadvantaged students needed much more assistance than the cost of their tuition if they were to be placed on an equal footing with their historically advantaged colleagues, with pocket money also being factored in.
Lester said the Davies Tax Committee had challenged Treasury’s “incomplete” modelling on the impact of a greenhouse carbon tax – due to be introduced in 2017 but likely to be delayed – on employment, the balance of payments, exchange rates, inflation and prices.
The committee had recommended the tax be applied on a trial basis at 0% “so that we can model it better”. — rayh@dispatch.co.za
Social responsibility a big deal
That was the view of Rhodes University tax expert Professor Matthew Lester in a lively PWC presentation in East London on this year’s budget.
Lester highlighted far-reaching changes to the Income Tax Act as part of the budget, which raised the salary limits on employers providing tax-free bursaries to relatives of employees.
An employer can now fund a bursary of up to R40 000 a year for a relative of an employee who earns less than R40 0000 a year.
And referring to the pending mass retrenchments at local sweet factory Candy Tops, Lester told the Dispatch: “That’s all about profit.
“It’s got to change. Is there not a nicer way of doing that?”
Traditionally, the mantra recited by business was that its sole responsibility was to increase profit for shareholders.
And, while business must use every available incentive and benefit to its advantage, Lester said it was “absolutely not” only about the bottom line numbers, but about business’s ethical imperative to be socially responsible.
“When there is an incentive , it’s about the private sector doing something for the social good, not just to increase the bottom line,” Lester said. “It’s a philosophical issue. Years ago, philosophy used to be a first-year university subject for future business people.
“Today, you don’t teach philosophy and ethics. You teach more bean counting and more law.”
He said business owners needed to be trained in what corporate social investment (CSI) – one element of the triple bottom line (TBL) approach – actually meant.
Too often, CSI was manipulated into developing a company’s brand rather than to ensure benefits to society.
“A lot of corporate social investment is glorified advertising.”
On the tax-free bursary provisions in section 10(1)(q) of the Income Tax Act, Lester calculated that by raising the salary limit to R400000 for employees benefiting from a company’s bursary scheme, an additional 1.5 million working parents could be assisted to pay for their children’s higher education.
“All companies should strive to create in-house bursary schemes to ensure that lower income employees with children who deserve to be at university, be given the opportunity to get there.
“Every human resources manager in South Africa should be working on this,” he wrote in a blog post.
He told the East London breakfast presentation that wealthy parents with children at university had also effectively benefited by about R3000 per child as a result of the withholding of this year’s tuition fee increase, which contributed to inequality.
In addition, disadvantaged students needed much more assistance than the cost of their tuition if they were to be placed on an equal footing with their historically advantaged colleagues, with pocket money also being factored in.
Lester said the Davies Tax Committee had challenged Treasury’s “incomplete” modelling on the impact of a greenhouse carbon tax – due to be introduced in 2017 but likely to be delayed – on employment, the balance of payments, exchange rates, inflation and prices.
The committee had recommended the tax be applied on a trial basis at 0% “so that we can model it better”. — rayh@dispatch.co.za
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