Budget in a nutshell

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26-02-2014
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Moneyweb
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Budget framework, spending programmes over the next three years and economic outlook.

Budget Framework

Total budget revenue: R1.1 trillion. Total budget expenditure: R1.25 trillion. Budget deficit of 4.0% of GDP for 2014/15; 3.6% in 2015/16 and 2.8% in 2016/17. Total debt as percentage of GDP continues to grow. Will rise to 44,3% of GDP in 2016/17. Only 10% of debt is in foreign currencies. Real growth in non-interest spending to grow by 2.2% over the next three years. Expenditure on travel, catering and consultants declines as a share of spending. The fastest-growing item of main budget expenditure is debt-service costs. This will amount to R115bn in 2014/15. Government debt was 39.7% of GDP in 2013/14 and will continue to rise and peak at 44.3% in 2016/17.

Economic outlook:

GDP growth of 2.7% in 2014, 3.2% in 2015 and 3.5% in 2016. CPI to breech 6% in 2014 peaking at 6.2%; declining to 5.5% in 2016. Current account deficit to average at 5.7% over the next three years. Strong growth in Sub-Saharan Africa to benefit expansion of non-mineral exports. Private sector to be the major contributor to job creation over the medium term. Government will support employment creation through a range of direct and indirect initiatives.

Spending programmes over the next three years:

R15.1bn on economic competitiveness and support initiatives R8.7bn on land restitution claims R78bn on university subsidies, R19,4bn for financial assistance to students R34.3bn on school infrastructure. R847bn on all infrastructure. R144bn to support municipal infrastructure R42bn on HIV and AIDS Social grants: R410bn will be paid to 16 million South Africans. Grant payments will increase as follows: State old age and war veteran’s grants: +R85 to R1350 per month (+6,7%) Disability grant: +R85 to R1350 per month (+6,7%) Foster care grant: +R30 to R830 per month (+3,8%) Child support grant: +R20 to R315 per month (+6,8%)

Tax proposals

No changes in the VAT rate or any other major changes to the tax regime. Personal income tax relief of R9.3bn. Marginal tax rate remains at 40% and kicks in at a taxable income of R673 101 per annum. Adjustments to tax tables of retirement lump-sum payments. 69% of taxpayers have taxable incomes of R250 000 and contributes 17% of all income tax paid. Top 2.4% (about 154000) of 6,4 million taxpayers will pay 30,7% of income tax. These taxpayers have annual taxable incomes of more than R1 m. Excise duties on alcohol and tobacco to increase by between 6.2% and 12%: 340ml beer and cider: +9c (+8%) Unfortified wine: +17c/l (+6,2%) Fortified wine: +83c/l (+7,5%) Spirits: +R4.80/750ml (+12%) Cigarettes: +68c/packet of 20s (+6,2%) Cigars: +R5.11/23g (+9%) Fuel Levy to rise by 12c/l. This is less than last year. The Road Accident Fund levy will increase by 8c/l. Fringe benefits on company cars will be calculated on the retail price of the vehicle. Measures to address acid mine drainage. Consultations will start soon with relevant parties to institute an environmental levy or equivalent instrument. Postponement of implementation of carbon tax by one year to 2016. Tax amendments will result in the decrease of total tax revenue by R5.6 billion. Tax regime for SMEs to be reviewed and simplified.