Unemployment increases and Tax Evasion Up

Posted On Thursday, 14 February 2013 08:02 Published by eProp@News
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South African households are failing to declare up to 30% of their incomes to SARS according to the Adcorp Employment Index for January which was released today by human capital management firm, Adcorp Holdings.

he Index also reveals a bleak employment scenario for the first month of 2013.

Loane Sharp, Adcorp's labour market analyst, says employment fell drastically in January 2013 at an annualised rate of 3.2% which saw the South African economy lose a huge number of jobs: 51,495.

"Job losses occurred across all contract types and in all economic sectors with permanent posts declining the most, by 5.3% or 40,232. This figure represents 80% of the employment losses last month. The wholesale and retail industries took the brunt of the downslide, plummeting by -8.8% (or 13,000 jobs) and -17.4% (or 4,000 jobs) respectively."

The January Adcorp Employment Index explores a worrying trend that sees South African households failing to declare some 30% of their incomes to SARS and Statistics SA.

Sharp says the implications of this in the informal sector are significant.

"Our Employment Index in February last year noted the results of Stats SA's Quarterly Labour Force Survey that 440,000 small business closures occurred between 2006 and 2011 and that the number of new business start-ups fell to an all-time low. It is highly likely that these businesses continued to operate, but stopped reporting to the authorities and moved into the informal sector where compliance with income tax laws is patchy.

"Some businesses are straddling both the formal and informal sectors, conducting some work in one and some in the other."

Sharp says Adcorp awaits with interest Finance Minister Pravin Gordhan's budget speech next week. "If the tax burden for high-income taxpayers goes up, so will the economic incentives to disappear into the informal sector."

"In order to stem the growth of informal economic activity there is no real alternative but to relax labour laws and reduce income taxes."

Unlike temporary and permanent employment, Sharp adds that jobs in the informal sector are precarious and offer no benefits or security.

Source: CBN

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