Brenthurst Initiative
Encyclopedia
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.
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.
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.
and drew praise from Cyril Ramaphosa
and Moss Ngoasheng and criticism from Tony Leon
and Mangosuthu Buthelezi
.
The initial response from some economist and trade unions was described as "downright cool".
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.
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.
Black Economic Empowerment
Black Economic Empowerment is a programme launched by the South African government to redress the inequalities of Apartheid by giving previously disadvantaged groups economic opportunities previously not available to them...
in South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
by Jonathan and Nicky Oppenheimer
Nicky Oppenheimer
Nicholas "Nicky" F. Oppenheimer is a South African businessman, the chairman of the De Beers diamond mining company and its subsidiary, the Diamond Trading Company. He also has a large financial interest in the diversified mining company Anglo American. In November 2011 the Oppenheimer family sold...
that called for tax incentives to encourage economic growth and black wealth creation.
The proposal
The initial, draft proposal release in August 2003 had the stated objectives of boosting South Africa's economic growthEconomic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
rate from 2.7 percent to 5 percent annually, developing a system of tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
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.
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.
Reception
The initiative was first released at a function opened by President Thabo MbekiThabo Mbeki
Thabo Mvuyelwa Mbeki is a South African politician who served two terms as the second post-apartheid President of South Africa from 14 June 1999 to 24 September 2008. He is also the brother of Moeletsi Mbeki...
and drew praise from Cyril Ramaphosa
Cyril Ramaphosa
Matamela Cyril Ramaphosa is a South African lawyer, trade union leader, activist, politician and businessman. He was born in Soweto, Gauteng province...
and Moss Ngoasheng and criticism from Tony Leon
Tony Leon
Anthony James "Tony" Leon is a South African politician who served as leader of the opposition from 1999-2007 as leader of the Democratic Alliance. Although still a member of the DA, he currently serves as the South African Ambassador to Argentina under the ANC government.-Early life:Leon grew up...
and Mangosuthu Buthelezi
Mangosuthu Buthelezi
Inkosi Mangosuthu Buthelezi is a South African Zulu politician who founded the Inkatha Freedom Party in 1975 and continues to lead the party today.His praise name is Shenge.-Early life:...
.
The initial response from some economist and trade unions was described as "downright cool".
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.
A 2004 proposal by the South African Revenue Service
South African Revenue Service
The South African Revenue Service is the revenue service of the South African government. It was established by legislation to collect revenue and ensure compliance with tax law...
for tax breaks to companies that give shares to a broad base of employees was considered to be linked to the Brenthurst Initiative.