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Thousands of employers have claimed R2.8 billion from the Employment Tax Incentive

Thousands of employers have claimed R2.8 billion from the Employment Tax Incentive
Jun 18
12:06 2015

Cape Town – Deputy President Cyril Ramaphosa says thousands of employers have claimed R2.8 billion from the Employment Tax Incentive since its inception.

The Deputy President said this when he, in his capacity as the leader of government business, appeared before Members of Parliament in the National Council of Provinces (NCOP) to answer oral questions on Wednesday.

The incentive, which was introduced by government last year, was signed into law by President Jacob Zuma to encourage employers to hire young people.

The Deputy President said the incentive is one of several critical initiatives put in place to address the challenge of youth unemployment.

“It is intended to reduce the cost to companies of employing younger and less experienced work seekers. Initial evidence is positive.

“Preliminary data indicates that 31 825 employers have claimed approximately R2.8 billion between the implementation of the incentive on 1 January 2014 and the end of February 2015,” he said.

In August last year alone, employers claimed the incentive for at least 274 000 employees.  Deputy President Ramaphosa said this was the month during which a record number of claims were submitted by employers.

While initial data was encouraging with regards to the efforts to curb youth unemployment, the Deputy President said it was too early to make an assessment of whether the tax incentive has been successful.

A review of the incentive would be done soon to assess its success and impact.

“Government committed in the legislation to a full review of the programme by December 2016, after at least two years of implementation and a reasonable period thereafter to ensure the tax returns of most employers who claim the subsidy have been submitted and verified.

“An evaluation should, however, be able to provide a better insight into how this incentive is working,” he said.

The Deputy President called on all sectors of society to join hands in order to positively change the fortunes of young job seekers.

“We need to complement initiatives like the employment tax incentive with vocational guidance, mentoring support and mechanisms to match people’s skills to appropriate opportunities.

“We should be broadening supplier development programmes, entrepreneurship incubators, and employment services and work-seeker support.

“We call on employers to rise to the challenge by taking on first time employees and providing them with effective management support and mentorship,” he said.

Savings made through cost-cutting measures

Responding to a question on whether Ministers and Premiers have complied with the cost-cutting measures announced in the 2013 medium term budget policy statement by Pravin Gordhan, the Minister of Finance at the time, Deputy President Ramaphosa said the review process of the Ministerial Handbook has been finalised.

“It must be noted that the expenditure related to Ministers and Premiers is administered by the relevant departments and therefore details in this regard will have to be obtained from the individual departments.

“By way of example, however, it should be noted that departments reduced travel and accommodation expenditure by approximately R580 million in the 2014/15 financial year,” he said.

The Deputy President said savings were registered through the negotiation of bulk rates with hotels on routes frequently travelled, cost savings on air travel and reducing the number of delegations to meetings.

“The National Treasury recently conducted an expenditure analysis at a provincial level between the 2013/2014 and 2014/2015 financial years. Overall, savings of 42% were realised in entertainment, 20% in venue and facility hire, 12% in catering and 5% in travel and subsistence.

“The cost containment measures demonstrate that government takes the financial pressure on the fiscus seriously and is responsibly seeking options to do more with less,” he said. –

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