WATCH LIVE: Minister of Finance Tito Mboweni delivers his second Budget Speech on Wednesday.
LIVE BLOG: Personal income tax relief & no VAT increase get thumbs up from SA
Minister of Finance Tito Mboweni delivers his second budget speech on Wednesday.
"The Minister of Cooperative Governance and Traditional Affairs and I have agreed that our officials will find ways to use the allocations made through the Municipal Infrastructure Grant to ensure that municipalities not only build new infrastructure but also maintain the infrastructure they already have."
"Today we announce the formation of the South African Sovereign Wealth Fund with a target capital amount of about R30 billion, which converts to about US$2 billion or so. Given the legal, administrative and procedural issues involved, a relevant bill will be submitted during the course of this Parliament. There are a variety of possible funding sources, such as the proceeds of spectrum allocation, petroleum, gas or minerals rights royalties, the sale of non-core state assets, future fiscal surpluses and money we set aside. This will ensure that we continue to invest in the future generations of this country in a fiscally-prudent manner."
The architecture will be that of a retail bank operating on commercial principles. The state bank will be subject to the Banks Act, and will have an appropriate capital structure and performance parameters on investments and loan impairments. It will be regulated by the Prudential Authority on its own merits
"Last year, this House passed legislation which will allow state-owned enterprises to apply for banking licences. In July 2019, I tasked the Deputy Minister of Finance with the responsibility to undertake the state bank project. Madam Speaker, I am pleased to inform the House that preferred options for the establishment of a bank are now ready."
"Working with the financial sector, a pilot of the Help to Buy scheme has supported over 2 000 families to buy their own homes. For every R1 subsidy 20 provided by government, the scheme crowds in R8 from the private sector. In a single year, the Help to Buy scheme has supported nearly R1 billion in new lending.
"To implement the reimagined industrial strategy:
1. An Innovation Fund will be capitalised with R1.2 billion over the next three years
2. Industrial business incentives worth R18.5 billion will create and retain approximately 56 500 jobs
3. An additional R107 million is reprioritised for the refurbishment of 27 industrial parks in townships and rural economies
4. R6.5 billion is allocated for small business incentive programmes of which R2.2 billion will be transferred to the Small Enterprise Development Agency.
"In 2019, South Africa signed the African Continental Free Trade Agreement, which comes into effect on 1 July 2020. This agreement will open up new markets, promote regional integration and contribute to economic growth. Today we announce complementary measures to make it easier to do crossborder financial transactions, which will support trade and investment."
"The SAA Sword of Damocles has now fallen on us. SAA has been placed under business rescue which will lead to a radically restructured airline. Over the medium term, Government has allocated R16.4 billion to settle guaranteed debt and interest. The associated restructuring costs will be reprioritised within the Budget.
"I am happy to announce that grants are adjusted as follows:
1. R80 increase for the old age, disability and care dependency grants to R1860 per month
2. R80 increase in the war veterans grant to R1880
3. R40 increase for the foster care grant to R1040 per month
4. The child support grant will increase by R20 to R445 per month."
"In fact, capital spending is the fastest growing component of non-interest spending. This spending is complemented by the Infrastructure Fund. Over the next three years the Development Bank of Southern Africa will package blended finance mega-projects of least R200 billion. Government has committed R10 billion over the next three years."
"In the education sector, investment goes to new schools, replacing schools constructed with inappropriate materials, and providing them with water, electricity and sanitation. In 2020/21 the maths, science and technology grant will introduce coding and robotics to learners in grades R to 3 as announced by the President."
"For our Aloe Ferox to grow to its full potential, we need to do things that will help it in the medium to long-run – for example, augmenting the soil with the right amount of organic manure, providing the right amount of sun and the correct amount of water. For a fast-growing economy we need to make sure our children are well educated, our people are healthy and our money is invested properly.
"In line with that target, the moderate inflation outcomes for 2019 of 4.1 per cent and the forecast for inflation to be about 4.5 per cent over the next few years, has helped to lower the cost of capital to firms, households and the public sector. The South African Reserve Bank will continue to undertake its duties in line with section 224 of the Constitution which is to perform its functions independently without fear, favour or prejudice in the interest of balanced and sustainable growth in the Republic.
"Regular consultation on fiscal and monetary policy is critical to the sustainability of our fiscal accounts, to the balanced growth of the economy, and to protecting the welfare of our people. We would like to re-iterate the current inflation target band of 6 to 3 per cent as the most appropriate monetary policy framework for a country like ours."
"Minister Pandor, the Minister of International Relations and Cooperation, is providing phenomenal leadership in building A Better Africa and a Better World. Her work is unlocking massive value for money from South Africa’s overseas missions by amongst other things:
1. Closing and merging some missions
2. Downgrading the level of representation
3. Reducing the number of officials
4. Establishing a fully-fledged Diplomatic Academy."
"We are already acting on fruitless and wasteful expenditure. Last year, this
House amended the Public Audit Act to empower the Auditor General to:
1. Refer matters to a public body for investigation and prosecution
2. Take binding remedial actions
3. Recover money directly from the responsible culprits ."
"Over the three years, public transport spending is adjusted by R13.2 billion, mainly on allocations to the Passenger Rail Agency of South Africa and the public transport network grant. The planning and implementation of integrated public transport networks will consequently be suspended in the Buffalo City, Mbombela and Msunduzi municipalities."
"The carbon tax and other measures will help green the economy, and will bring in R1.75 billion over the next few months. This will be complemented by more focussed spending on climate change mitigation. We remain extremely concerned about plastic bags throughout the length and breadth of our country. In this regard, we have increased the plastic bag levy to 25 cents."
"I am again happy to report that there is no increase in the price of sorghum beer. In line with Department of Health policy, we will start taxing heated tobacco products, for example hubbly bubbly. The rate will be set at 75 per cent of the rate of cigarettes. Electronic cigarettes, or so-called vapes, will be taxed from 2021."
"We have increased excise duties to keep pace with inflation. From today:
A 340ml can of beer or cider will cost only an extra 8c
A 750ml bottle of wine will cost an extra 14c
A 750ml bottle of sparkling wine an extra 61c
A bottle of 750 ml spirits, including whisky, gin or vodka, will rise by R2.89
A packet of 20 cigarettes will be an extra 74c
A 25 gram of piped tobacco will cost 40c more
A 23 gram cigar will cost an extra R6.73."
"There will be a renewed focus on illicit and criminal activity, including non-compliance by some religious public benefit organisations. Religious bodies must operate within the strict boundaries of the law if they are to enjoy tax exempt status. The annual tax free savings account contribution limit rises to R36 000."
"Start-ups will ignite the economy. The tax system supports them in a number of ways, including the preferential small business tax regime, the VAT registration threshold and the turnover tax. We will review these to improve their effectiveness while at the same time reducing the scope for fraud and abuse.
"Hard-working tax payers, who earn on average R265 000 a year, will see their income tax reduced by over R1 500 a year. Our income tax system is progressive, and the adjustments reflect this. Someone earning R10 000 a month will pay 10 per cent less in tax. Someone earning R100 000 a month will pay about 1.5 per cent less."
A sound macroeconomic framework always lays the foundation for growth. Budgets are complex, but the numbers are simple.
The numbers show that we have work to do.
For 2020/21, revenue is projected to be R1.58 trillion, or 29.2 per cent of GDP. Expenditure is projected at R1.95 trillion, or 36 per cent of GDP.
This means a consolidated budget deficit of R370.5 billion, or 6.8 per cent of GDP in 2020/21.
"Last year, the Government embraced the ideas contained in the document Towards an Economic Strategy for South Africa. This is our plan, and it contains the basic and fundamental pillars of our approach:
1. Strengthening the macroeconomic framework to deliver certainty, transparency and lower borrowing costs 2. Focusing spending on education, health and social development
3. Modernising “network industries” and restructuring our state-owned enterprises
4. Opening markets to trade with the rest of the continent
5. Implementing a re-imagined industrial strategy
6. Lowering the cost of doing business
7. Focusing on job-creating sectors, such as agriculture and tourism
"These include, amongst others:
1. The fruits of the reform agenda led by the President
2. Lower inflation
3. The interest rate reduction earlier this year
4. The recent gains in platinum group metals prices
5. The impending change to the electricity regulatory framework
6. The tax proposals we are setting out today."