On 25 February, the Minister of Finance, Nhlanhla Nene, delivered his first full National Budget.
The highlights are:
Budget framework
- Budget deficit of 3,9% (expected to narrow to 2,5% in 2017/18).
- The main budget non-interest expenditure ceiling has been reduced by R25bn over the next two years.
- Total revenue (consolidated) will increase from R1 091bn in 2014/15 to R1 188bn (32,2% of GDP compared to 29% in last year’s budget) and total expenditure from R1 243bn to R1 351bn. The GDP in 2015/16 is estimated at R4 191bn.
- Increases in personal income tax rates and the general fuel levy are set to add R16bn to gross tax revenue in 2015/16.
- Real growth in non-interest spending will average 2,1% over the next three years and will be more closely aligned to long-term average real GDP growth from 2017/18. Debt service costs will still grow fast (10,1%).
- Capital remains the fastest-growing item of non-interest spending over the medium term, with compensation and goods and services growing at a slower rate.
- The biggest item on the budget, education and related functions, will rise by 8,0% over the three years.
Specific spending programmes over the next three years
Over the next three years, government will spend:
- An additional 7,9% per year, increasing expenditure from R1,24trn in 2014/15 to R1,56trn in 2017/18.
- At least 60% of non-interest expenditure to improve social services and alleviate poverty.
- R647bn on basic education, including R36,7bn on school infrastructure.
- R634bn on local development and social infrastructure, including R145,5bn on municipal infrastructure.
- R502bn on health, with R46,6bn on the HIV and AIDS conditional grant.
- R498bn on social protection.
- R197bn on post-school education and training.
- R18bn on providing free meals to over nine million learners.
Tax proposals
- Increase marginal personal income tax rates by one percentage point for all taxpayers earning more than R181 900, and adjusting tax brackets and rebates to account for fiscal drag.
- Raise the general fuel levy by 30,5c/litre. The Road Accident Fund levy will also increase by 50c/litre, bringing total fuel levy increases to 80,5c/litre.
- Take further steps to combat base erosion and profit shifting.
- Provide a more generous turnover-tax regime for small businesses.
- Increase excise duties on alcohol and tobacco products.
- Review the diesel refund scheme.
- Strengthen the energy-efficiency savings initiative.
- Raise the electricity levy from 3,5 cents per kilowatt hour to 5,5c/kWh.
- Change transfer duty rates and brackets to provide relief for middle-income households. Property of up to R750 000 will now be exempt from transfer duty.
Macro-economic outlook
- GDP growth is estimated at 1,4% in 2014, 2,0% in 2015, 2,4% in 2016 and 3,0% in 2017. It is considerably lower than last year’s estimates.
- Export growth is expected to accelerate rather sharply from 0,9% in 2014 to 5,0% in 2017, while imports will grow an estimated 4,6% in 2015 and accelerate to 5,5% in 2017.
- Consumer inflation will fall to 4,3% in 2015 and accelerate to 5,7% in 2017.
- Capital formation is also optimistically forecast to grow from 3,2% of GDP in 2013 to 6% in 2016.
- Household consumption is set to grow by 2,0% in 2015 to 3,0% in 2017.
- The balance of payments wil stay in deficit (-4,5% of GDP in 2015, -5,2% in 2017).
- Sin taxes will rise as follows: beer 7c; fortified wine 19c; ciders and alcoholic fruit beverages (330 ml) 7c; unfortified wine 15c; sparkling wine 48c; spirits 377c; cigarettes (20) 82c; cigarette tobacco 91 (50g); pipe tobacco 26c (25g); cigars 309c (23g).
– Source: www.fin24.com
For more information: http://www.treasury.gov.za/documents/national%20budget/2015/default.aspx |
