FINANCE Minister Pravin Gordhan had a tough message for South Africans in today’s Budget Speech in Parliament, with the introduction of a new tax bracket for the very rich, state debt creeping up and almost all economic indicators and financial numbers weaker than in last year's budget.
While South Africa is "once again at a crossroads" and "tough choices have to be made to achieve development outcomes", Gordhan nevertheless tried to stress the need for growth.
He used the word “transformation” more than 50 times in his speech, but against this background said: “Our growth challenge is intertwined with our transformation imperative. We need to transform in order to grow, we need to grow in order to transform. Without transformation, growth will reinforce inequality; without growth, transformation will be distorted by patronage."
Some highlights of the budget are:
Over the next three years, government will spend:
- R490 billion (R457 billion last year) on social grants.
- R106 billion (R93.1 billion) on transfers to universities, while the National Student Financial Aid Scheme will spend R54,3 billion (R41,2 billion).
- R751,9 billion (R707,4 billion) on basic education, including R48,3 billion for subsidies to schools, R42,9 billion for infrastructure, and R12,7 billion (R14,9 billion) for learner and teacher support materials.
- R114 billion (R108,3 billion) for subsidised public housing.
- R94,4 billion (R102 billion) on water resources and bulk infrastructure.
- R189 billion (R171,3 billion) on transfers of the local government equitable share to provide basic services to poor households.
- R142,6 billion to support affordable public transport.
- R606 billion on health, with R59,5 billion on the HIV/Aids conditional grant.
Social grant spending and increases
Social grants were increased by about 7% on average.
The number of social grant beneficiaries is expected to reach 18,1 million by the end of 2019/20.
The specific increases are:
- State old age grant from R1 505 to R 1 600 per month;
- State old age grant, over 75s from R1 525 to R1 620;
- War veterans grant from R1 525 to R 1 620;
- Disability grant from R1 505 to R 1 600;
- Foster care grant from R890 to R920;
- Care dependency grant from R1 505 tot R1 600; and
- Child support grant from R355 to R380.
Tax
- A new top marginal income tax bracket for individuals combined with partial relief for bracket creep will raise an additional R16.5bn.
- R6.8bn will be collected through a higher dividend withholding tax rate. Increases in fuel taxes and alcohol and tobacco excise duties will together increase revenue by R5.1bn.
- As soon as the necessary legislation is approved, government will implement a tax on sugary beverages. The rate will be 2.1c per gram for sugar content above 4g per 100 ml.
- A revised Carbon Tax Bill will be published for public consultation and tabling in Parliament by mid-2017.
- The first R900 000 of the value of property acquired from 1 March 2017 will be taxed at zero percent. Before 1 March 2017 the first R750 000 of the value of property was taxed at zero percent.
- The general fuel levy will increase by 30c/litre on 5 April 2017. This will push the general fuel levy up to R3.15/litre of petrol and to R3.00/litre of diesel. The road accident levy will increase by 9c/litre of petrol and diesel on 5 April 2017.
Sin taxes rise
- Beer 12c/340ml;
- Fortified wine 26c/750ml;
- Ciders and alcoholic fruit beverages 12c/340ml;
- Unfortified wine 23c/750ml;
- Sparkling wine 70c/750ml;
- Spirits 443c/750ml;
- Cigarettes 106c/packet of 20;
- Cigarette tobacco 119c/50g;
- Pipe tobacco 40c/25g; and
- Cigars 658c/23g.
http://www.fin24.com/Budget/budget-in-a-nustshell-tough-times-ahead-20170222
