The 2016 Budget in brief

South Africa’s Finance Minister Pravin Gordhan delivered his National Budget in Parliament on Wednesday. These are some of the key points of the 2016 budget:

Budget deficit:
– Lowering the budget deficit from 3.2% in 2016/17 to 2.8% in 2017/18, and 2.4% in 2018/19
Growth and inflation:
– GDP growth is estimated at 0.9% in 2016, and expected to accelerate to 1.7% in 2017 and 2.4% in 2018.
– Inflation expected to decrease from 6.8% to 6.3% in 2017

Tax revenue:
– An extra R18.1 billion will be raised in 2016/17, and R15 billion in 2017/18 and 2018/19

– R31.8 billion to cover the needs of higher education, the drought and the government’s commitment to the New Development Bank.

Personal income tax
– Tax relief of R5.5 billion for lower and middle-income earners
Spending programmes (over the next 3 years)
– Social grants receive R457.5 billion
– The National Student Financial Aid Scheme gets R41.2 billion
– R93.1 billion on transfers to universities
– Water resources and bulk infrastructure receives R102 billion

Tax proposals
– Capital gains tax for individuals increases to 16.4% from 13.7%, and companies to 22.4% from 18.6%
– Transfer duties on properties above R10 million will be raised from 11% to 13%

Tyre levy
– Introduction of a tyre levy to finance recycling programmes

Fuel levy
– A 30c per litre increase in fuel levy on 6 April 2016, which will raise R6.8 billion
Sugar tax
– Introduction of a tax on sugar-sweetened beverages on 1 April 2017
Plastic bag levy
– An increase from 6c a bag to 8c a bag

Sin taxes
– Increase between 6% and 8.5% in duties on alcoholic beverages and tobacco products, which will raise about R9.5 billion
Public sector employment
– Posts will be frozen from 1 April to reduce the number of public servants by 20 000 and save R7.2 billion on the wage bill over the next 3 years
State-owned airlines
– Possible merger of SAA and SA Express, with a potential minority equity partner

South Africans wait to see if the minister’s budget will save the country from a rating downgrade to junk status.