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2017 Budget In A NutShell

February 23 2016  18:50 l   

Cape Town – Finance Minister Pravin Gordhan had a tough message for South Africans in Wednesday's Budget Speech in the National Assembly, with the introduction of a new tax bracket for the very rich, state debt creeping up and almost all economic indicators and fiscal numbers weaker than in last year's budget.

 


While South Africa is "once again at a crossroads" and "tough choices have to be made to achieve development outcomes", Gordhan nevertheless tried to stress the need for growth. 

He used the word “transformation” more than 50 times in his speech, but against this background said: “Our growth challenge is intertwined with our transformation imperative. We need to transform in order to grow, we need to grow in order to transform. Without transformation, growth will reinforce inequality; without growth, transformation will be distorted by patronage."

He also indicated that fiscal consolidation will continue.
 
An additional R28bn will be collected in the coming financial year by means of those earning more than R1.5m per year paying 45% of that back to the taxman (the previous top rate was 41%), limited adjustment for bracket creep, a fuel levy rise of 30 cents per litre, a higher dividend withholding tax rate and the usual rise in sin taxes (excise on alcohol and tobacco). 

There was relief for property buyers with the first R900 000 (previously R750 000) of the value of a transaction not liable for transfer duty. 

Social grants were increased by about 7% on average. 

While it looks like Gordhan made an effort to appease his critics, listening to him was tinged with sadness on the impression that it was his last budget after making a comeback as finance minister just more than a year ago.  

The highlights of the budget are:

Macro-economic outlook

• Gross domestic product growth will gradually improve from 0.5% in 2016 to 1.3% in 2017 and 2.0% in 2018, supported by improved global conditions and rising consumer and business confidence. The percentages are considerably lower than last year’s estimates. The review says though that greater availability and reliability of electricity should also support stronger growth in 2018/19.

•  Exports are expected to grow by 1.9% in 2017, 4.9% in 2018 and 5% in 2019, after estimated negative growth of -1.2% last year.

• After reaching 6.4% in 2016, consumer inflation is expected to decline to 5.7% in 2018. 

• The current account deficit, after reaching 4% in 2016, will come down to 3.7% in 2018 and 3.8% in 2019. 

• Government will continue to enable investment through regulatory reforms and partnerships with independent power producers.

• Public sector infrastructure bottlenecks will be addressed through reform and capacity building. During 2017/18, government will establish a new financing facility for large infrastructure projects.

Budget framework

•  The budget deficit (consolidated) crept up to 3.4% for 2016/17 from the 3.2% stated in last February’s budget. This was due to less revenue collected than expected. The deficit is expected to narrow to 3.1% for 2017/18 and 2.6% in 2019/20.  

•  State debt is also steadily creeping up. Debt stock as a percentage of gross domestic product is expected to stabilise at 48.2% in 2020/21 (previously 46.2% in 2017/18, and before that 43.7% in 2017/18). 

•  The main budget non-interest expenditure ceiling has been lowered by R26bn over the next two years (almost the same as the R25bn planned last year).  

• An additional R28bn (R18.1bn last year) of tax revenue will be raised in 2017/18. Measures to increase revenue by a proposed R15bn in 2017/18 will be outlined in the 2018 Budget.

• R30bn has been reprioritised through the budget process to ensure core social expenditure is protected. 

• Real growth in non-interest spending will average 1.9% over the next three years. Apart from debt-service costs, post-school education is the fastest-growing category, followed by health and social protection. 

Specific spending programmes over the next three years

Over the next three years, government will spend:

• R490bn (R457bn last year) on social grants.  

• R106bn (R93.1bn) on transfers to universities, while the National Student Financial Aid Scheme will spend R54.3bn (R41.2bn).    

• R751.9bn (R707.4bn) on basic education, including R48.3bn for subsidies to schools, R42.9bn for infrastructure, and R12.7bn (R14.9bn) for learner and teacher support materials.  

• R114bn (R108.3bn) for subsidised public housing.     

• R94.4bn (R102bn) on water resources and bulk infrastructure. 

• R189bn (R171.3bn) on transfers of the local government equitable share to provide basic services to poor households. 

• R142.6bn to support affordable public transport.   

• R606bn on health, with R59.5bn on the HIV/Aids conditional grant.

Tax proposals

• A new top marginal income tax bracket for individuals combined with partial relief for bracket creep will raise an additional R16.5bn.   

• R6.8bn will be collected through a higher dividend withholding tax rate. Increases in fuel taxes and alcohol and tobacco excise duties will together increase revenue by R5.1bn.  

• As soon as the necessary legislation is approved, government will implement a tax on sugary beverages. The rate will be 2.1c per gram for sugar content above 4g per 100 ml.

• A revised Carbon Tax Bill will be published for public consultation and tabling in Parliament by mid-2017. 

• The first R900 000 of the value of property acquired from March 1 2017 will be taxed at zero percent. Before March 1 2017 the first R750 000 of the value of property was taxed at zero percent.

• The general fuel levy will increase by 30c/litre on April 5 2017. This will push the general fuel levy up to R3.15/litre of petrol and to R3.00/litre of diesel. The road accident levy will increase by 9c/litre of petrol and diesel on April 5 2017.

• Personal income tax will bring in R482bn, VAT R312bn, company tax R218bn, fuel levies R96.1bn and customs and excise duties R96bn in the coming year. 

Sin taxes rise

Taxes on alcohol and tobacco are set to rise as follows: 

Beer 12c/340ml;
Fortified wine 26c/750ml;
Ciders and alcoholic fruit beverages 12c/340ml;
Unfortified wine 23c/750ml;
Sparkling wine 70c/750ml;
Spirits 443c/750ml;
Cigarettes 106c/packet of 20;
Cigarette tobacco 119c/50g; 
Pipe tobacco 40c/25g; and
Cigars 658c/23g.


Social grant spending and increases

Spending on social grants is set to rise from R164.9bn in 2016/17 to to R209.1bn by 2019/20, growing at an annual average of 8.2% over the medium term. The number of social grant beneficiaries is expected to reach 18.1 million by the end of 2019/20. 

The specific increases are: 

• State old age grant from R1 505 to R 1 600 per month; 

• State old age grant, over 75s from R1 525 to R1 620;

• War veterans grant from R1 525 to R 1 620; 

• Disability grant from R1 505 to R 1 600; 

• Foster care grant from R890 to R920 ;

• Care dependency grant from R1 505 to R1 600; and 

• Child support grant from R355 to R380.

-Fin24

 

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Local And International Banks Face Prosecution Over Rand Price Fixing

February 15 2016  20:00 l   

Cape Town - The Competition Commission on Wednesday referred a collusion case to the tribunal for prosecution against 17 banks, including three of South Africa's big banks.

 

The commission said in a statement it has been investigating a case of price-fixing and market allocation in the trading of foreign currency pairs involving the rand since April 2015. It has now referred the case to the tribunal for prosecution.

The banks are Bank of America Merrill Lynch International Limited, BNP Paribas, JP Morgan Chase & Co, JP Morgan Chase Bank NA, Investec Ltd, Standard New York Securities Inc, HSBC Bank Plc, Standard Chartered Bank, Credit Suisse Group; Standard Bank of South Africa Ltd, Commerzbank AG; Australia and New Zealand Banking Group Limited, Nomura International Plc, Macquarie Bank Limited, ABSA Bank Limited (ABSA), Barclays Capital Inc, Barclays Bank plc (Respondents).

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Sekunjalo Injects R500m To Boost Entrepreneurs Within Renewable Energy

February 09 2016  14:15 l   

South African entrepreneurs yesterday received a shot in the arm after Sekunjalo Investment Group committed R500 million to boost renewable energy initiatives and women-owned businesses.

Sekunjalo executive chairman Iqbal Survé said that the Sekunjalo Impact Fund would play a meaningful role in improving their quality of life.

Survé said the company had already made the amount available and extended an invitation to local and international investors to join in raising more money for the fund.

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Drought And Weak Rand Had A Devastating Impact On Employees' Income

January 31 2016  16:25 l   

Cape Town - Salary earners in South Africa have seen a drop in their inflation adjusted salaries for a seventh straight month in December, the latest BankservAfrica Disposable Salary Index (BDSI) released on Tuesday showed.

According to Dr Caroline Belrose, head of information services at BankservAfrica, the weak rand and drought had a devastating impact on real incomes of employees and their families as inflation hurt consumers’ pockets.

On a year-on-year level, disposable salaries in December 2016 were lower than in December 2015 and 2014.

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The Rand is Undervalued By 62.70%, According To The Economist Index

January 23  2016  13:45 l   

Johannesburg – The rand should be trading at R5.20 to the dollar, according to the latest Big Mac Index by The Economist.

According to the index, the rand is undervalued by 62.70%.

The Big Mac Index was put together by The Economist as far back as 1986. It measures whether currencies are at the “correct” level, based on the theory of purchasing power parity (PPP).

PPP suggests that in the long run, exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services, in this case a Big Mac burger, in any two countries


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There Is An Urgent Need To Restore Compact Between Business And Society - WEF 

January 18  2016  21:30 l   

Davos - Business leaders at the World Economic Forum Annual Meeting agreed that there was an urgent need to restore the compact between business and society.

Jim Hagemann Snabe, member of the Board of Trustees of the World Economic Forum said there was a crisis of confidence in leadership and that companies needed to be responsive and responsible to all their stakeholders.

"We have an opportunity to reinvent how we do business, to refocus our efforts towards ensuring long-term sustainability," he said.

Full Story

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Manufacturers In SA Concerned Over Subdued Business Sentiment 


January 12  2016  21:30 l   

Manufacturers in SA are concerned at the subdued business sentiment reflected in the latest Barclays Purchasing Managers’ Index for December 2016, released on Thursday. Industry body, the Manufacturing Circle, said the index, which provides a reliable guide to sentiment within the manufacturing sector, had not shown an improvement in demand in several months.

"At 46.7 index points, the South African index has remained below the neutral 50-point measure for the fifth month in a row — in contrast to a global upward trend," it said.

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SA Is Not Producing Enough School Leavers Competent In Maths And Science 


January 10  2016  11:30 l   

ANC Pinning Hope On Government's Black Industrialist Programme 


January 09  2016  12:10 l   

Cape Town  – The ANC is pinning its hopes on government’s Black Industrialists Programme, launched in 2016, to increase the black majority’s ownership of the economy. 

Hlaudi's Appointment Ruled Unlawful 


December 12  2016  15:10 l   

Cape Town - The Western Cape High court has ruled that Hlaudi Motsoaneng’s appointment as the SABC's group executive of corporate affairs as irrational and unlawful.

Econet Wireless Introduces Rand Wallet In Zimbabwe 


December 08  2016  16:40 l   

Harare – South Africa’s currency could effectively start circulating in Zimbabwe as mobile network Econet Wireless introduces rand wallet on its mobile money platform in the country.

Aarto System Has Become A Challenge For Traffic Fines Collections 


November 14  2016  14:50 l   

The cities of Johannesburg and Tshwane no longer want to be test cases for the Administrative Adjudication of Road Traffic Offences (Aarto) system over its enforcement issues and disappointing traffic fine collections.
Medium-Term Budget 2016 In A Nutshell 

October 26  2016  19:00 l   

Cape Town – South Africa is in a difficult economic transitional phase and consolidation and balance will be the key words regarding government finances over the next three years. That was the core 

Google Data Request On The Rise From Governments 


October 13  2016  10:00 l   

Washington - Google said Wednesday that data requests from governments around the world hit a record high in the six months ending in June, extending a steady rise.

President Zuma Officially Appointed Busisiwe Mkhwebane As New Public Protector


October 06  2016  10:10 l   

PRESIDENT Jacob Zuma has officially appointed advocate Busisiwe Mkhwebane as the new public protector for the next seven years, the Presidency said on Thursday.

SA Borders Needs To Be Protected From Illegal Immigrants And Their Illegal Businesses -JHB Mayor Herman Mashaba


October 04  2016  13:40 l   

JOHANNESBURG mayor Herman Mashaba has called for SA to strengthen its borders, saying it needs to be protected from illegal immigrants and their illegal businesses.

The Economy Must Be Controlled By Black Majority-Minister Brown


September 27  2016  18:10 l   

Johannesburg – The economy must be controlled by the black majority, said Minister of Public Enterprise, Lynne Brown.  Brown spoke to media briefly following a closed meeting with the Black 

Apple Linked With Buying Supercar Maker McLaren


September 22  2016  18:00 l   

Apple has been linked with a shock £1.5bn deal to buy McLaren Technology Group, the Formula One team owner and supercar maker.

A deal between Apple and the British company would dramatically shake up the technology and automotive industries. The California-based company’s interest in McLaren Technology Group highlights its ambition to develop technology that could be used in an electric and driverless car.

Full Story

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SAA Financial Statements For The 2014/2015 Show R5.6bn Loss

September 20  2016  21:40 l   

Cape Town - SAA’s losses for the 2014/15 financial year was R5.6bn — close to R1bn more than the expected amount of R4.7bn. 

Bank Of England Introduces Plastic Banknotes


September 13  2016  20:20 l   

London - The Bank of England introduced its first plastic banknotes on Tuesday, with a new five pound entering circulation in England and Wales featuring World War Two leader Winston Churchill.

AfriHost To Offer Free Daily 18 hour Internet Promotion


September 08  2016  17:00 l   

Johannesburg - Internet service provider Afrihost has attempted to shake up the local ADSL market with a promotion that offers free daily 18 hour internet.

MTN Zakhele Futhi R9.9 billion BEE Transaction Starting 12th September

September 07  2016  11:40 l   

Zakhele Futhi is a special purpose vehicle which will hold approximately 4% equity in the MTN Group. The new share scheme will give qualifying black participants a discounted way to own MTN  
Futuregrowth Should Have Raised Concerns With SOEs Before Going Public - Ralph Mupita

 September 06  2016  21:00 l   

Cape Town - Futuregrowth, the asset manager which withdrew funding to six of South Africa’s state-owned enterprises (SOEs), should have raised their concerns directly with these entities and not gone to the media, said Ralph Mupita, CEO of Old Mutual Emerging Markets. Full Story

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SA Steel Industry About To Collapse Due To Chinese Dumping

 August 30  2016  22:20 l   

Cape Town - Trade union Solidarity is calling for urgent preventative measures to stop Chinese dumping in the steel industry, which has already suffered about 11 000 job losses last year.
SA Healthcare Industry And Medical Schemes in Collusion -Cosatu

 August 26  2016  15:40 l   

Cape Town - In an open letter to the Competition Commission, Cosatu has accused the South African healthcare industry and medical schemes of collusion with regards to the availability of cancer screening tests. Full Story

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MTN To Unveil A R9.9bn BEE Zakhele Futhi Transaction In September 

 August 22  2016  12:00 l   

Johannesburg - Mobile network MTN is set to unveil a R9.9bn black economic empowerment transaction dubbed MTN Zakhele Futhi.
SA Agric Export Declined In 2015 Due To Drought  

 August 19  2016  17:40 l   

SA’s worst drought in decades has cost the country billions of rand in lost export revenue, data showed on Friday.

 

 

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