South African Budget 2016
South Africans all around held their breaths to hear the outcome of this year’s budget speech. Some decisions made us cringe while others surprisingly made us sigh in relief.
During the speech, Finance Minister, Pravin Gordhan, stressed the importance of terminating reckless government spending and implementing a plan for stronger economic growth between government and the business sector.
Here follows some of the highlights of the budget speech:
Government will lower the expenditure ceiling by R10 billion in 2017/ 18 by reducing public sector compensation budgets.
R31.8 billion has been set out to support higher education, the New Development Bank and other priorities.
Debt stock as a percentage of GDP is expected to stabilise at 46.2% in 2017/ 18
Over the next three years:
R457.5 billion will go towards social grants.
R93.1 billion towards transfers to universities. The National Student Financial Aid Scheme becomes R41.2 billion richer.
R707.4 billion will be spend on basic education which includes; R14.9 billion for learner/teacher support materials, R45.9 billion for subsidies to schools and R38.3 billion for infrastructure.
R108.3 billion will go towards public housing.
R102 billion on water resources and bulk infrastructure.
R30.3 billion will go towards improving the national non-toll road network.
Metrorail and Shosholoza Meyl will receive R13.5 billion to subsidise passenger trips and long-distance passengers.
R10.2 billion will help manufacturing development incentives.
R4.5 billion will go in aid of national health insurance pilot districts.
Tax:
R9.5 billion will be raised through the increase of general fuel levy, excise duties and environmental taxes.
A fiscal drag relief of R5.5 billion will be implemented for lower and middle income earners.
R2 billion will be raised through adjustments to capital gains tax and transfer duty.
How the capital gains tax will change for:
Individuals – from 13.7% to 16.4%
Companies – from 18.6% to 22.4%
Transfer duty on property sales above R10 million has raised from 11% to 13%
In order to reduce a large sugar intake, government has proposed to introduce a sugar tax on 1 April 2017.
On October 1 2016 a tyre levy will be implemented.
General fuel levy will be raised by 30c a litre effective April 6 2016.
Road Accident Fund levy will stay the same and will be replaced by the Road Accident Benefit Scheme.
In order to maintain the current level of relief in real terms, tax credits on medical scheme contribution are increased.
Plastic bag levy, now 8c, has increased by 2c per bag.
Contributions in % towards government revenue:
Personal Income tax – 37.5%
Company tax – 16.9%
VAT – 25.6%
Fuel levies – 5.5%
Sin Taxes:
The Minister of Finances showed no mercy when he described how sin taxes will increase. Consumers will certainly feel it this year. Here are a few examples of how the sin tax will affect the price of alcohol and cigarettes.
Beer 11c – 340ml
Fortified wine 27c – 750ml
Unfortified wine 18c – 750ml
Sparkling wine 59c – 750ml
Ciders 11c – 340ml
Spirits 394c 750ml
Cigarettes 82c – 20 cigarettes
Cigarette Tobacco 94c – 50g
Pipe Tobacco 27c – 25g
Cigars 432c – 23g
Social Grant increases:
The following social grants will be increased from:
| Grant | Previous | Now |
| State old age | R1,415 | R1,505 |
| War veterans | R1,435 | R1,525 |
| Disability | R1,415 | R 1,505 |
| State old age grant, over 75s | R1,435 | R1,525 |
| Foster care | R860 | R890 |
| Child support | R330 | R350 |
| Care dependency | R1,415 | R1,505 |
