Budget: Increased government spending and new taxes this year

2011-02-23 12:54

Finance Minister Pravin Gordhan today announced a R94.1-billion rise in government spending over the next three years, a budget deficit for this year of 5.3%, and projected growth domestic product (GDP) growth of 3.4%.

According to Budget documents tabled in the National Assembly, provision is also made for personal income tax relief of R8.1 billion, an 18-cents-a-litre increase in fuel levies, and a tax on gambling winnings over R25 000.

The bulk of the 2011/12 consolidated budget of R979.3 billion (projected revenue R824.5 billion) goes to social services (R577.3 billion).

The education budget rises by 9.7% to R189.5 billion, with the basic education allocation going up by 10.6% to R145.5 billion, and tertiary education by 6.8% to R26 billion.

Social protection follows with a budget of R146.9 billion, reflecting an increase of 10.7%; housing and community amenities R121.9 billion (up by 19.5%); and health R112.6 billion (up by 9.8%).

The public order and safety budget allocation rises by 8.2% to R90.9 billion – police R60.7 billion (up 8.5%), prisons R16.5 billion (up 8.6%), and justice R13.7 billion (up 6.2%).

Transport gets R65.6 billion (up 8.4%) and defence R38.4 billion (up 13.2%).

There is an unallocated contingency reserve of R4.1 billion.

Headline consumer price index inflation (CPI) is expected to be 4.9% for the year.

Over the next three years, R809 billion will be invested in infrastructure.

During this period, additional spending plans include R10 billion for job creation, small enterprise development, and youth employment; R10.4 billion for public transport, roads, and rail infrastructure; and R9.5 billion for increasing enrolment at further education and training (FET) colleges and skills development.

Similarly, R8.2 billion will go to upgrading school facilities; R7.9 billion to improve primary healthcare, revitalise hospitals, and combat HIV/Aids; R7.2 billion for human settlements upgrading, municipal services, and water infrastructure; and R2.8 billion for rural development and emerging farmer support.

The projected deficit of 5.3% is expected to drop to 4.8% in 2012/13, and to 3.8% in 2013/14.

Debt is projected to rise to R1.4 trillion in 2013/14, up from R526 billion at the end of 2008/09.

With effect from April, the old age pension, disability and care dependency grants will increase by R60 a month, to R1140.

Pensioners over 75 will get R20 a month extra.

Foster care grants rise by R30 to R740 a month, and the child support grant from R250 to R260 in April, and to R270 in October.

On the taxation side, individuals will benefit from R8.1 billion in personal income tax relief.

From March this year, tax will be payable only on income above R59 750 for taxpayers below age 65, and R93 150 for those 65 and older.

A third rebate of R2 000 a year is proposed, increasing the tax threshold for taxpayers aged 75 and older to R104 261.

An increase in the yearly tax-free interest income – to R22,800 – for individuals below 65 years is proposed, and to R33 000 for individuals 65 years and over.

The tax-free lump-sum benefit upon retirement will increase from R300 000 to R315 000.

With effect from April next year, all gambling winnings above R25 000, including pay-outs from the National Lottery, will be subject to a final 15% tax.

A packet of 20 cigarettes will cost 80 cents more, a 750ml bottle of spirits R2.86, a 340ml can of beer 6.4 cents, and a bottle of wine 13.5 cents more.

The general fuel levy will increase by 10 cents a litre and the Road Accident Fund (RAF) levy by eight cents a litre, effective April 6.

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