South Africa has slipped one place in the World Bank and International Finance Corporation’s Doing Business 2007 report to 29th overall from 28th last year, with co-author of the report, Caralee McLiesh, saying one of the key areas for reform needed in South Africa is the complex tax system.
While positive reforms were registered in the reduction of the property transfer rate to 8% from 10% of property values, and there was a reduction in corporate tax rates and stamp duties, she said the complex tax system is still a key stumbling block.
“There are not level taxes and there is a lot of administration involved in the tax system. There are many different types of taxes and different government departments involved,” she said.
McLeish said South Africa is an example of how a country can slip down the ranking if the pace of reform does not improve and if the reforms undertaken are also not deep enough.
SA labour market too rigid
Meanwhile, McLeish also said that one of the key areas for reform needed in South Africa is the rigid labour laws.
“It is quite an undertaking to dismiss workers and the hours of work are also highly regulated in South Africa,” said McLiesh.
“There are also costly procedures to hire,” she added.
“Whereas the underlying idea of these regulations is to protect vulnerable workers, they ultimately result in employers being prevented from hiring,” she concluded.
Cost of property registration in SA ‘high’
McLiesh also pointed to the cost of property registration as one of the key areas for reform needed in South Africa.
“While there was a reduction in the property transfer duty rate from 10% to 8% of the property value, the 8% is still very high. For example, it is just 2% in Ghana and I am not clear why it has to be so much in South Africa,” said McLiesh. — I-Net Bridge