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Budget gives billions in tax relief

Thursday, 27 February 2014   (0 Comments)
Posted by: Author: Sapa
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Author:  Sapa

Cape Town - Income tax relief of R9.3 billion and massive future spending on social grants are among the main features of this year's pre-election budget.

Other highlights include a budget deficit that is expected to narrow to 2.8 percent of GDP by 2016/17, supporting a stabilisation of debt at 44.3 percent of GDP.

Tabling his 2014 Budget in the National Assembly on Wednesday, Finance Minister Pravin Gordhan told MPs he expected a budget deficit of four percent of GDP for this year and next (2014/15).

Tax revenue this year (2013/14) was expected to be R1bn higher than projected in the 2013 budget.

Gordhan said real growth in non-interest spending should average 1.9 percent over the next three years.

Over the next three years, government intended to spend, among others, R410bn on social grants, R15.2bn on the economic competitiveness and support package, R8.7bn on settlement of land restitution claims, R7bn for subsistence and smallholder farmers, R78bn on university subsidies and R19.4bn for the National Student Financial Aid Scheme, and R143.8bn to support municipal infrastructure.

Tax proposals included steps to encourage small enterprise development, clarity on the valuation of company cars for fringe-benefit tax purposes, and reforms to the tax treatment of the risk business of long-term insurers.

Also proposed are amended rules for VAT input tax to combat gold smuggling; measures to address acid mine drainage; and, adjustment of the proposed carbon tax and its alignment with desired emission-reduction outcomes identified by the environmental affairs department.

Consumer price inflation (CPI) was expected to come in at 5.7 percent for 2013, 6.2 percent this year, 5.9 percent next year, and 5.5 percent in 2016.

Gordhan announced that the old age and disability grants would increase in April, from R1270 a month to R1350.

The foster care grant would increase from R800 to R830, and the child support grant would increase from R300 to R310 a month in April, and to R320 in October.

Increases in excise duties on alcoholic beverages and tobacco would add nine cents to the price of a 340ml can of beer and 68 cents to a packet of 20 cigarettes. Whisky would cost R4.80 a bottle more. These increases took effect immediately.

The general fuel levy would increase by 12 cents a litre on April 2, and the Road Accident Fund levy would increase by eight cents a litre.

Consolidated revenue for 2014/15 was expected to be R1.1trn, and spending R1.25trn.

As usual, the biggest slice of the cake -- R253.8bn -- would go to education. Of this, basic education was allocated R177.6bn and university education R29.9bn.

Health was allocated R145.7bn, social protection R144.5bn, and housing and community amenities R142.9bn.

Debt service costs swallowed R114.9bn of the general public services budget allocation, with R6.8bn going to home affairs and R7.5bn to international relations and co-operation.

Altogether R115.7bn was allocated to public order and safety, with police getting R78.1bn, correctional services R19.7bn, and justice R17.9bn.

Defence was allocated R47.9bn, and transport R81.6bn. Provision was also made for a contingency reserve of R3bn.

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