Lungile Ntimba
Struggling Footwear Company The Drip Group must be liquidated and not given a ‘free pass’ because it is not tax compliant, according to DA Member of the Gauteng Legislature Mike Moriarty.
Moriarty’s utterance came after Gauteng MEC for Finance and Economic Development, Lebogang Maile tried to intervene and save Drip – entrepreneur and founder Lekau Sheoana’s company famous for making sneakers, by writing to the South African Reserve Bank (SARB) asking for interventions.
Maile wrote a letter to the SARB Governor Lesetja Kganyago requesting that he initiate a rehabilitative intervention and not a punitive one when dealing with Drip’s failure to comply with tax law legislation.
Moriarty said he agreed with Maile, that the investigative process should not run for two years, but said the answer should be not the cancellation of a tax debt.
He added that the party is also concerned about the plight faced by the Drip Company as well as other small businesses in Gauteng.
Mariarty requested the chairperson of Gauteng Provincial Legislature’s Economic Development Committee to invite Maile to answer in an effort to determine whether he acted appropriately regarding the matter of the company’s tax status.
“Maile’s public attacks on SARB are reckless as his actions could be seen as him seeking a write-off of tax debt owed by Drip company” he said, adding that the tax revenue helps millions of poor people in the country, therefore, suggesting a write off would deprive them access to essential government services.
In his submission to SARB, Maile said that in respecting the rule of law and maintaining the crucial principle of the separation of powers, it’s important that the law should never be punitive but rather, rehabilitative.
Maile said institutions such as SARB should also assist to equip SMMEs with the requisite knowledge and skills rather than to apply a punitive approach. In this way, he argued that this will ensure the sustainability and survival of township businesses and SMMEs broadly, thereby growing and developing the provincial economy to the benefit of all the people of Gauteng.
“This, sadly, has happened to many SMMEs, including The Drip Group. Many SMMEs do not survive such challenges and this is a contributing factor for why between 70 and 80% of them fail within the first five years,” Maile argued.
He said that the government of Gauteng has an obligation to help businesses in the province in material and non-material ways.
“We cannot sit back and watch The Drip Group (Pty) Ltd, a company founded in the township of Ivory Park by a young Black man who had the odds stacked against him, be liquidated,” he stated.
The company provides employment to hundreds of people from disadvantaged groups that include women and youth.
“The government must provide the necessary support to The Drip Group and other SMMEs that are facing challenges, particularly when such challenges arise from failures of compliance with legislation, which is not the same thing as blatant and intentional criminality” he said.
Analysts have accused Maile of tacitly conceding that he failed The Drip Group as the MEC is the executive authority for a government agency, the Gauteng Enterprise Propeller (GEP), which is responsible for providing financial advice to businesses.
This would include the need to seek tax advice and direct businesses where to get assistance to keep their tax affairs in order.
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