It has been a slightly boring, workmanlike and restrained budget. The first such from our relatively new finance minister.
In Nhlanhla Nene’s 2015 budget speech, he announced:
- A one percentage point jump in personal taxation for those on more than R181 900 a year, and an increase in the fuel levy by 30.5c a litre, alongside a 50c rise in the Road Accident Fund Levy. The boost to personal taxation and to the fuel levy are expected to raise an extra R16.8bn.
- Business taxes are revised, so qualifying firms with a turnover of below R335 000 a year will pay no tax, and the maximum rate is reduced from 6% to 3%.
- Excise taxes on alcohol and cigarettes are being boosted.
- Transfer duty will only apply properties above R750 000, with higher rates for properties over R2.25m.
- There will be “revised monthly ceilings” for e-Tolls, and the Minister suggested a higher government contribution, without giving much detail – although he did say in his Press Conference that Sanral needs to be able to discharge its responsibilities.
- Contributions to the UIF will be reduced for a year, thanks to a current surplus of R90bn.
- There will be a tightening up of education expenditure, aimed at clamping down on waste and corruption.
- A central database will be compiled of suppliers to government.
- Eskom is to apply for “adjustments towards cost-reflective tariffs. The government’s capital injection of R23bn will be paid in three instalments, and further help may be given through an equity conversion “of government’s subordinated loan to Eskom.”
- Support is also being provided to SAA and to the Post Office.
- The Carbon Tax will be introduced in 2016, with draft legislation being tabled later this year.
- The background to the budget is the need to consolidate public finances in the context of slower growth and rising debt.
- GDP growth is expected to rise this year to just 2% (down from October’s estimate of 2.5%), following an estimated 1.4% in 2014, with 2.4% next year and 3% in 2017. The cut in projected growth is mainly due to the energy crisis.
- Total government spending is estimated at R1 243.4bn in 2014/15, R1 351.0bn in 2015/16, and R1 448.8bn and R1561.7bn in subsequent years.
- Total budget revenue is estimated at R1 091.0 in 2014l15, increasing to R1 188.9 the next year, followed by R1 331.5 and R1 439.5.
- Budgeted expenditure over the next two years has been reduced by R25bn across national, provincial and local government.
- A budget deficit of 3.9% is forecast for 2015/16, falling to 2.5% in 2017.18.
- R10.2bn has been allocated over the medium term to manufacturing development incentives and support and support for services, such as business process outsourcing.
No doubt accountants are sending their abaci into a frenzy, working out what all this means. The poor may get slightly richer, and the rich will almost certainly get slightly poorer. With Eskom putting the brakes on the economy it is deeply concerning that GDP growth is not going to be soaring. Nene has come over as a humourous, capable and competent politician with a budget which fails to inspire. Let’s hope that when it comes to the ratings agencies and global investors, it fails to frighten either.
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