2015 Budget Speech: The highs and lows
Finance Minister Nhlanhla Nene delivered his first Budget Speech in Parliament on Wednesday.
JOHANNESBURG - Finance Minister Nhlanhla Nene on Wednesday announced an increase in personal tax, fuel levies, sin taxes and a substantial hike in the Road Accident Fund (RAF) and its fuel levy.
Nene presented his first Budget Speech in Parliament.
Economists and tax specialists anticipated additional tax measures but were unclear if it would affect personal taxes or companies.
He announced that personal income tax would go up by one percent for tax payers earning more than R181,900 a year.
However, public servants would still benefit from wage talks.
"We are also mindful that public service salary negotiations have yet to be concluded and we hope an agreement will be reached in time for salary improvements to be implemented in April."
Nene said tax brackets, rebates and medical aid credits would be adjusted for inflation. This means there would be some tax relief for those earning under R450,000 but those with higher salaries would pay more.
South Africans will also be paying an extra 80,5 cents a litre for petrol.
He said the general fuel levy was going up by 30,5 cents a litre from 1 April and that the RAF Levy would increase by 50c a litre.
Nene said the fund was in the red to the tune of R98 million and that the extra money would help it clear its claims backlog.
SIN TAXES UP
- A quart of beer is going up by 15,5 cents
- A bottle of wine will cost 15 cents more
- Sparkling wine lovers will fork out an extra 48 cents per bottle
- Whisky tipplers will pay R3,77 more per bottle
- Smokers will be burning up an extra 82 cents for every pack they consume.
GROWTH FOR 2015
The minister said our projected growth for 2015 was two percent, down from 2,5 percent indicated in October. He expected it to rise to three percent in 2017.
He added that global economic growth is expected to remain sluggish with a 3,6 percent growth expected in the US this year. Europe however, remains weak.
"Electricity constraints hold back growth in manufacturing and mining. A consolidated deficit of 3,9 percent of GDP is projected for 2015/16 falling to 2,5 percent in 2017/18."
The budget for spending on catering, entertainment and venues is set to decline by eight percent a year, while travel and subsistence will be cut back by 4 percent a year.
Nene said special economic zones would be allocated R3,5 billion over the medium term, mainly for infrastructure development.
"Unemployment remains our single greatest economic and social challenge."
As of 1 April, pension, war veterans, disability and care grants are set to increase by R60 to R1,410.
Child support grants will increase to R330.
Foster care grants will increase by R30 to R860.
Nene declared that around R640 billion would be allocated to basic education over the next three years.
"Under Angie Motshekga's oversight, personnel planning for schools are currently under review, to ensure that learner-teacher ratios are maintained at appropriate levels. The number of qualified teachers entering the public service is projected to increase from 8 227 in 2012/13 to 10 200 in 2017/18."
He said the school infrastructure backlogs programme would be allocated R7,4 billion for the replacement of over 500 unsafe or poorly constructed schools. The funds would also be used to address water, sanitation and electricity needs.
In recent weeks there had been much discussion around the National Student Financial Aid Scheme (Nsfas).
Students at the Tshwane University of Technology demonstrated over funding two weeks ago.
"We are mindful of the pressures on student financing at our higher education institutions. The National Student Financial Aid Scheme is projected to spend R11,9 billion in 2017/18, up from R9,2 billion in 2014/15."
Nene added that this would support a further increase in university enrolments and in technical and vocational colleges.
There is also tax break for small business and this is aimed at helping businesses with an annual turnover with less than R1 million.
Those with a turnover of less than R350,000 wouldn't pay tax and the maximum rate's been halved from six to three percent.
South African Revenue Services is setting up small business desks at its offices to help small business owners comply with tax requirements.
For some, lower transfer duties on property and new rates will mean no transfer duties would be paid on properties that sell for less than R750, 000, but for properties that sell for more than R2,5 million, the rate would increase.