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Brenthurst Initiative

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The Brenthurst Initiative was a 2003 policy paper on Black Economic Empowerment in South Africa by Jonathan and Nicky Oppenheimer that called for tax incentives to encourage economic growth and black wealth creation.

The proposal

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The initial, draft proposal release in August 2003 had the stated objectives of boosting South Africa's economic growth rate from 2.7 percent to 5 percent annually, developing a system of tax incentives and penalties to encourage black ownership of companies and businesses and to raise R224-billion to ensure 26 percent black ownership of all equity on the JSE Securities Exchange by 2014.[1]

The tax incentives, on a sliding scale, would be calculated based on a company's rating on a governmental empowerment scorecard and was intended to provide a competitive advantage to racially transformed companies. This was interpreted as a "carrot" to balance the "stick" of legislated transformation requirements and associated penalties.[2]

Reception

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The initiative was first released at a function opened by President Thabo Mbeki[3] and drew praise from Cyril Ramaphosa and Moss Ngoasheng and criticism from Tony Leon and Mangosuthu Buthelezi.[4]

The initial response from some economist and trade unions was described as "downright cool".[5]

The initiative was subsequently criticised for being too limited, for potentially reducing the tax base and for effectively proposing that a black majority government fund the transformation of white-owned businesses.[6]

The Helen Suzman Foundation called the initiative "both good news and bad news".[7]

A 2004 proposal by the South African Revenue Service for tax breaks to companies that give shares to a broad base of employees was considered to be linked to the Brenthurst Initiative.[8]

Notes

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  1. ^ Independent Online(1)
  2. ^ Financial Mail(1)
  3. ^ News24(1)
  4. ^ Cape Times(1)
  5. ^ Business Report(2)
  6. ^ Fin24(1)
  7. ^ "The Brenthurst Initiative".
  8. ^ Business Report(1)

References

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