Investing for the future

2011-02-24 00:00

THE national Budget delivered by Finance Minister Pravin Gordhan yesterday looks to building for the future through substantial investments in education, the youth and infrastructure, while resisting the temptation of borrowing heavily.

“We must offer young work-seekers real hope where at present there is despair,” Gordhan said.

The dominant themes in the 2011/12 budget are the youth, education, infrastructure and easing the debt burden so that tomorrow’s generations will not have to pay for the excesses of today.

The R5 billion youth employment subsidy mooted last year will be tabled for debate shortly. Further Education and Training colleges will be given R14 billion over the next three years and student financial assistance will be stepped up.

Focusing on enhancing the quality of education, Gordhan said this spending priority takes up the largest share of government spending — at more than one-fifth of non-interest allocations.

“Education is key to sustaining long-term growth, increasing employment and reducing inequality,” Gordhan acknowledged.

Infrastructure development will receive R800 billion over the next three years.

For the poor, the Budget expands spending on housing, rural development, better community services and social assistance grants, Gordhan told the National Assembly.

For workers, it emphasises job creation and spending on the “social wage”, including access to health services, education, social security, transport and municipal infrastructure.

For the business sector, it expands investment in modernising infrastructure and transport logistics, accelerating further education and skills development, and supporting research, technology and industrial investment.

For the small business sector, there are targeted financial and enterprise development programmes, and tax relief measures.

Real GDP growth is projected to reach 3,4% in 2011, 4,1% in 2012 and 4,4% in 2013.

Steady employment gains — of about two percent a year — are projected to raise disposable incomes, supporting household consumption and investment.

Real growth in exports is expected to average 6,5% a year over the medium term as commodity exports benefit from strong demand and high prices.

Inflation is forecast to remain within the target range of three to six percent, edging towards the upper end of the range in 2013 as the economy strengthens.

But increasing food and oil prices represent risks to the inflation outlook, Gordhan warned.

Fiscal and monetary policy will continue to work in partnership.

“Monetary policy, operated by the SA Reserve Bank, will continue to be focused on controlling inflation, and we will continue to ensure that fiscal policy is countercyclical within a sustainable long-term framework.”

Government will continue to assist the Reserve Bank to accumulate foreign exchange reserves when market conditions are favourable and engage in foreign currency swaps to moderate the effect of capital flows on the exchange rate.

The credibility of monetary policy in achieving the target inflation range, combined with a commitment to fiscal discipline, are important foundations for moderating exchange rate volatility.

Gordhan said proposed reforms to the financial sector include a shift to a “twin peak” system of financial regulation, with market conduct under the Financial Services Board and prudential regulation in the Reserve Bank.

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

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

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

With effect from April 2012, all gambling winnings above R25 000, including pay-outs from the National Lottery, will be subject to a final 15% tax.

Changes to the tax treatment and administration of contributions to retirement funds are also proposed. From March 2012, an employer’s contribution will be treated as a taxable fringe benefit, and employees will be allowed to deduct up to 22,5% of taxable income for contributions to approved retirement funds, up to a maximum of R200 000 a year.

The projected deficit of 5,3% is expected to drop to 4,8% in 2012/13, and to 3,8% in 2013/14.

Social protection followed with a budget of R146,9 billion, an increase of 10.7%; housing and community amenities R121,9 billion (19.5%); and health R112,6 billion (9,8%). — Sapa.

 

• Personal income tax relief of R8,1 billion to protect against inflation; low earners get most of the benefit

• No transfer duties on properties of up to R600 000

• Medical aid deduction up from R670 a month to R720 as a tax credit

• General fuel levy increase of 10c a litre, and 8c a litre more for the Road Accident Fund

• Increases of 4,5%-10,3% in taxes on alcohol and tobacco products

• Taxation of gambling winnings

• Tax-free interest income increases from R22 300 to R22 800 a year. For individuals 65 years and over the figure rises from R32 000 to R33 000. The foreign interest income threshold will remain at R3 700 a year

•More service providers will be allowed to offer living annuities, increasing savings products and competition

•Government to consider savings incentives for first-time homeowners and higher education

•A third rebate for individuals 75 years and older

Economy and employment

•Budget deficit of 5,3% projected in 2010/11, 4,8% in 2011/12 and 3,8% in 2013/14

•National government net loan debt projected to rise from R526 billion at the end of 2008/9 to over R1,4 trillion in 2013/14

•South Africa’s New Growth Path aims to create four million jobs in 10 years

•Social grants to increase by 5,5% on average

•Investment in infrastructure of over R800 billion over the next three years

•Economic growth of 3,4% is projected for 2011, increasing to 4,4% by 2013

•R9 billion jobs fund to co-finance employment initiatives with self-sustaining potential

•Youth employment subsidy to create net 178 000 jobs over three years.

— Moneyweb.

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Comments have been closed for this article.

Inside News24

 
/News

Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.