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