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The Influence of Excise Taxation Levied on Product Sales on the Financial Sustainability of South African Tobacco-and-Alcohol-Selling Small, Medium and Micro Enterprise

Juan-Pierré Bruwer, Mariaan Lombard, Yolandé Smit and Ankit Katrodia
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Juan-Pierré Bruwer: Graduate Center of Management, Cape Peninsula University of Technology, Cape Town, South Africa
Mariaan Lombard: Cape Peninsula University of Technology, South Africa
Yolandé Smit: Higher College of Technology Abu Dhabi Women’s Campus, United Arab Emirates
Ankit Katrodia: University of KwaZulu Natal, South Africa

Expert Journal of Business and Management, 2019, vol. 7, issue 1, 100-106

Abstract: In South Africa, Small, Medium and Micro Enterprises (SMMEs) are often described as the driving forces of the national economy, mainly due to the socio economic value they add. Unfortunately, prior research suggests that South African SMMEs are adversely influenced by an array of economic factors, one of which is taxation. One form of taxation, which influences an array of South African SMMEs, is that of excise taxation; as levied on specific products that are considered detrimental to the social- and/or environmental well-being of South African citizens. When taking into account that excise taxation has increased year-on-year for the past 20 years, the perception was formulated that South African tobacco-and-alcohol-selling SMMEs that are subject to excise taxation, experience weak financial sustainability. As such, this study placed emphasis on the influence excise taxation levied on products sold on the financial sustainability of tobacco-and-alcohol-selling South African SMMEs. This study was exploratory and empirical in nature and fell within the positivistic research paradigm. A total of 50 members of management of South African tobacco-and-alcohol-selling SMMEs were targeted, all of whom had to adhere to strict delineation criteria. Stemming from the results, it was found that with the most recent increase in excise taxation, less alcohol products and tobacco products were sold by these business entities, resulting in drastic reductions in profitability levels and liquidity levels, negatively influencing their financial sustainability.

JEL-codes: H20 H71 (search for similar items in EconPapers)
Date: 2019
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