NATIONAL NEWS - Finance Minister Tito Mboweni delivered his maiden Budget speech in Parliament on Wednesday.
In a nutshell:
Eskom (and other SOEs)
· Government not taking on Eskom’s debt
· Setting aside R23 billion a year to support Eskom during its “reconfiguration”
· Support conditional on appointment of a chief reorganisation officer (CRO)
· Finance minister Tito Mboweni likens reorganisation to “curatorship”
· Mboweni: The president is right when he says Eskom will not be privatised
· Contingency reserves revised upwards to R13 billion for 2019/20 to respond to possible requests for financial support
· Support budget-neutral “as far as possible”
· Cabinet considering proposal to end guarantees for operational purposes
· Mboweni: Summit must be held on where to go with state-owned enterprises (SOEs).
Growth and other key figures
· GDP growth for 2019 revised downwards from 1.7% to 1.5% (2020: 1.7%; 2021: 2.1%)
· Tax revenue for 2018/19 to undershoot mini-budget estimate by R15.4 billion, half of this due to higher than expected Vat refunds
· Consolidated budget deficit to widen to 4.2% in 2018/19 from mini-budget estimate of 4% (2019/20: -4.5%; 2020/21: -4%)
· Gross debt to GDP ratio to stabilise at 60.2% in 2023/24, higher than mini-budget projection of 59.6%
· In 2019/20 government will spend R243 billion more than it earns (revenue of R1.58 trillion and spending of R1.83 trillion)
· SA is borrowing R1.2 billion each weekday
· Interest expenditure is R1 billion per day.
· No change to personal income tax rates or brackets but slight adjustment to rebates (revenue of R12.8 billion to be raised this way; collection by stealth)
· No inflationary adjustment to medical tax credit
· No changes to tax rates for corporate income tax or Vat
· Employment tax incentive of up to R1 000 can be claimed for employees earning up to R4 500 pm (previously R4 000)
· Sugar tax increase from 2.1 cents per gram to 2.21 cents per gram
· Carbon tax of 9c per litre on petrol and 10c per litre on diesel effective June 5
· General fuel levy increase by 15c per litre
· Road Accident Fund levy increase by 5c per litre
· Plans to tax electronic cigarettes and tobacco heating products
· Excise duty on cigarettes to rise by R1.14 to R16.66, and 12 cents to R1.74 per can of beer
· New Sars commissioner to be appointed “in the coming weeks”
· Judge Dennis Davis to assess tax gap (difference between tax due and tax collected)
· Review of explosion of duty-free shops in SA planned
· Introduction of export tax on scrap metal to be explored.
· Baseline expenditure adjusted downwards by R50.3 billion since mini-budget
· Half of the reduction comes from adjustments to spending on compensation
· Older public servants may retire early and gracefully, leading to savings of R4.8 billion in 2019/20; R7.5 billion in 2020/21 and R8 billion in 2021/22
· Limits on overtime, bonus payments and pay progression planned
· Staffing of diplomatic missions considered “unjustified”, to be reviewed
· No salary increases for members of parliament and provincial legislatures or executives at public entities
· Provisional allocations for financial support to Eskom and Infrastructure Fund offsets baseline reduction
· Expenditure ceiling revised upwards by R16 billion over three years
· Allocation to Jobs Fund to rise to R1.1 billion over three years
· Old age grant rises R80, foster care up R40 to R1 000, and child support grant to R420 in April and R430 in October
· Help-to-buy subsidy to help first-time home buyers purchase a home; R950 million for pilot phase over three years.
· Central pillar of budget and reprioritisation
· Will accelerate R526 billion of on-budget projects by bringing in the private sector and development finance institutions
· In several cases, the private sector will design, build and operate key infrastructure assets
· Government to commit R100 billion over next decade.