12 Things You Should Know About South Africa’s 2017 Budget Speech

By Peter Pedroncelli AFKI Original Published: February 22, 2017, 7:40 am
2017 budget speechPravin Gordhan. Photo: Gallo/thesouthafrican.com

On Wednesday, 22 February, South African minister of finance Pravin Gordhan delivered his 2017 budget speech.

This was the second budget speech of Gordhan’s second stint as minister of finance.

Investors and the global credit agencies were keenly listening to Gordhan’s words to gauge the policies that were in place, and the likelihood that South Africa would be able to negotiate the difficult waters ahead.

At the same time South Africans were tuned in to the minister’s speech for the details that would affect their daily lives, careers and the livelihood of their families.

Here is a closer look at 12 things that you should know about the 2017 South African budget speech.

Sources: Moneyweb, IndependentOnline, BusinessTech.

taxes

VAT remained unchanged. Photo: Wikipedia

No increase in VAT

Value Added Tax was one of the areas in which additional revenue could have been garnered, with an increase from the current 14%, but there will be no increase this year, with a mention of potential increase in 2018/19.

Thinkstock

Richer South Africans will be expected to pay more tax – Thinkstock

The rich will pay more tax

While income tax increases across the board did not materialise, rich South Africans will be taxed at a higher bracket. A new 45% tax rate for those earning more than around $115,000 per annum has been introduced, with around 100,000 taxpayers affected by this.

SAA. Photo: dispatchlive.co.za

SAA is a controversial state-owned enterprise. Photo: dispatchlive.co.za

Support continues for state-owned enterprises

Eskom, Prasa, the Post Office, South African Airways, the SABC and others have caused serious headaches for government over the last few years, but these state-owned enterprises will enjoy continued support from government in their turnaround plans this year.

rand recovers

South African Finance Minister Pravin Gordhan, 2014. Photo: Schalk van Zuydam/AP

No new allocation for nuclear

The Nuclear Build Programme was not mentioned during the budget speech, and this means that the controversial programme will receive no new allocation under the current budget.

Thinkstock

Pensions and child-support grants were boosted – Thinkstock

Budget deficit to decline

According to minister Gordhan, based on his calculations and the allocations mentioned in the 2017 budget speech, the budget deficit is set to decline from 3.4% in 2016/17 to 3.1% in 2017/18.

ibtimes.com

New tax for sugar heavy drinks – ibtimes.com

New sugar tax to move forward

A new sugar tax will be implemented later this year. This is designed to improve the health of the population through incentives for drinks with less added sugar, while providing government with additional tax revenue.

mnn.com

Cigarettes and alcohol prices increased – mnn.com

Sin tax increases

As is traditional in these annual speeches, the budget accounts for increases in duties payable on certain products such as alcohol and cigarettes, known as sin taxes. Duties on wine, beer and spirits are set to increase by 11 percent, 23 percent and 36 percent respectively.

A home in Soweto that is for sale. Photo: The Sowetan

Good news for those buying a house

There was good news from the budget for those who want to enter the property market, as the threshold above which the transfer duty is paid is set to be increased from $57,000 to $68,600.

Ghana Canada Medical Centre

The next phase of the National Health Insurance will be implemented – greenglobalhealth.com

Government pushing forward with National Health Insurance

Government is moving on to the next phase of the implementation of the National Health Insurance (NHI), with a focus on improved access to a common set of maternal health and ante-natal services and family planning services, as well as improved services for people with disabilities.

South Africa Finance Minister Pravin Gordhan (Image: YouTube)

Increased cooperation with private enterprise

The minister called for increased state cooperation with private enterprise in the country, and said that government would be making an increased effort to work with private companies for the benefit of all South Africans.

A carbon tax is set to be introduced. Photo: beritatrans.com

Carbon tax moving forward with revised legislation

The minister mentioned that the carbon tax will be moving forward, with revised legislation set to be published by the middle of the year for public consultation, at which point other elements will be considered ahead of the implementation of the tax in future years.

rand rigging

Offshore disclosures added funds to treasury. Image: worldfinancialreview.com

Special Voluntary Disclosure Programme producing rewards

The South African Revenue Service (Sars) received disclosures of $289 million in foreign assets under the Special Voluntary Disclosure Programme (SVDP), and the minister believes that this will yield revenue of about $45 million.

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