Finance Minister Pravin Gordhan today unveiled his latest – and possibly his last – budget. ZA Confidential was in Cape Town for the budget, and here is our summary of the key points…..
– Gordhan noted that the global economy is still struggling, with an “unsteady” global economic outlook and he said the ZA economy needs to go in a “new, bold direction for higher growth, decent work and greater equality”
– He stressed the importance of the National Development Plan (NDP) to prepare the ground “for the next phase of our economic and social transformation.” He said job creation and poverty reduction will require annual economic growth of 5% or more.
– He predicted a growth rate of just 2.7% this year for the ZA economy, with a budget deficit of 4% of GDP this year. Growth will rise to 3.5% in 2016. The current account deficit will average 5.8% of GDP over the medium term
– “Potential domestic risks” include further delays in new infrastructure, particularly additional electricity capacity, higher inflation due to rand weakness, and protracted labour disputes
– He said ZA needs annual growth of 5% or more to make progress and create jobs, and he said initiatives underway include infrastructure investment, support for special economic zones, a tax incentive to support youth employment, the phasing in of National Health Insurance and further investment in renewable energy
– There will be real government expenditure growth of 2%/annum over the medium term
– Infrastructure spending has been R1 trillion over the past 5 years and will be R847 over the next three years
– Unemployment benefits are to be extended from 238 days to 365 days if the claimants are actively seeking work
– The number of people eligible for social grants will rise to 16.5 million by 2016/17 – but one million “invalid beneficiaries” have been removed from the system.
– Old age and disability grants will rise in April from R1270 a month to R1350
– A Financing Paper on the National Health Insurance scheme will be tabled in Cabinet “shortly”. Gordhan says earlier that he hopes this will be before the election.
– Government supports the NDPO’s target of creating 1 million jobs in agriculture and land reform by 2030, with R7 billion in grants to provinces to support farmers
– Support for small business of R6.5 billion over three years
– Red tape is to be cut for environmental impact assessments, water licences and mining licences – with 300 days from application for a mining licence to final approval.
– Gordhan announced personal income tax relief for individuals of R9.25 billion, with 40% of this relief going to people earning below R250 000 a year.
– There will be a boost to the tax-free lump sum paid out of retirement funds from R315 000 to R500 000
– Excise duties rise, with 9c on a can of beer, 68 cents on a pack of cigarettes and R4.80 on a bottle of whisky.
– The fuel levy goes up by 12c a litre from 2nd April, with the road accident fund levy rising by 8c a litre.
– Discussions will be initiated with the mining industry to find an “appropriate funding mechanism” to deal with acid mine drainage
– The Carbon Tax is postponed to 2016 “to allow for further consultations”, and Eskom is to be given special treatment, to reduce the impact on electricity prices
– Government is continuing to cut waste by cutting back on budgets for consultants, travel, accommodation and venue hire. Leases on government buildings are also being looked at. As is procurement.
– No major changes to personal or business taxes