Flash Briefing: J&J vaccine trial stops; Sasol tax ‘gift’; wealth tax to fix SA; retail lease rules

  • Johnson & Johnson halts clinical trials of its Covid-19 vaccine after a participant falls ill. This is the second time that a front-runner developer has paused testing in the race to create a viable immunization against the virus. The participant’s illness is being evaluated, the New Brunswick, New Jersey-based company said late Monday, adding that it would share information after further investigation. J&J shares fell 2.4% in trading before US exchanges opened. The vaccine is undergoing tests in as many as 60,000 volunteers from Peru to South Africa. J&J is racing along with rivals such as Moderna Inc., Pfizer Inc. and AstraZeneca Plc to deliver a shot to help blunt the pandemic. Drugmakers must balance time pressures — especially as coronavirus cases set new records — with safety considerations in the crucial last stage of testing. (Source: Bloomberg)
  • Corporates that are generating returns for shareholders may be riding on taxpayers’ backs, with stock market darling Sasol benefiting to the tune of about R8bn from fuel subsidies and a carbon tax exemption. The fuel and chemicals company received a carbon tax exemption of R6.5 billion ($394 million) last year as well as R1.6 billion rand in direct subsidies through South Africa’s regulated fuel price, according to the report from the International Institute for Sustainable Development. South African taxpayers are carrying a heavy weight with state-owned entities like SAA, Eskom, Denel, the SABC and the Land Bank all requiring sizeable cash injections – of R3bn and more – to keep afloat. (Source: Bloomberg)
  • Wealth tax to fix SA. The President’s Economic Advisory Council, to counter South Africa’s biggest economic contraction in almost nine decades, is recommending  increases to the fuel levy and estate taxes and a three-year “solidarity tax” that would boost income tax for higher earners, according to Bloomberg news agency. For more on that and all the other stories in this bulletin, do visit BizNews.com.
  • In an agreement that ushers in a new era for retailers, Shoprite Checkers will stop with immediate effect, enforcing the exclusivity clause contained in various lease agreements against smaller and speciality stores. This is in terms of the consent agreement between Shoprite Checkers and the Competition Commission Tribunal. Exclusivity against other supermarkets will cease immediately in non-urban areas, and will be phased out over five years in urban areas. According to the Competition Commission, the agreement ushers in a new era in the South African grocery retailing environment. This opens up access for SMEs and other retailers in more than 1 000 locations countrywide in which Shoprite Checkers has exclusivity.
  • All regions in SA lost about a fifth of their jobs between February-April, although the cities began to show signs of recovery with the easing of the lockdown to level 3, research from the University of the Free State and the Human Sciences Research Council shows. Half of all adults in rural areas were unemployed by June, compared with a third in the metros. So the crisis has amplified pre-existing disparities between cities and rural areas. More than a third of all shack dwellers (36%) lost their jobs between February and April, compared with a quarter (24%) in the townships and one in seven (14%) in the suburbs. These effects are unprecedented. There appears to have been a slight recovery in the suburbs between April-June, mostly as a result of furloughed workers being brought back onto the payroll. Few new jobs were created. Other areas showed less signs of bouncing back. Overall, the economic crisis has hit poor urban communities much harder than the suburbs, resulting in a rate of unemployment in June of 42-43% in townships and informal settlements compared with 24% in the suburbs. (Source: UFS)