2012/13 Budget broadly welcomed

2012-02-23 07:55

Political parties and others have broadly welcomed Finance Minister Pravin Gordhan’s proposed 2012/13 Budget tabled in the National Assembly yesterday.

The budget exceeds R1 trillion – in fact, R1.06 trillion – for the first time ever, with the bulk of spending, R615.7 billion, earmarked for social services.

Revenue is expected to be about R904.8 billion.

DA spokesperson Tim Harris said the money allocated for infrastructure and growth was “not good enough”.

“I don’t think we got it today (Wednesday), but let’s give the minister credit because he managed to bring the budget deficit down.

“The fact that he managed to do that shows us that we have more space to be bold on growth and on infrastructure particularly. We want to see far more on growth. Those numbers aren’t good enough.”

Congress of the People (Cope) spokesperson Nick Koornhof said the government should lead the way and show it could spend taxpayers’ money properly.

It was also important for the Congress of SA Trade Unions (Cosatu) to support the budget, he said. “It is very important that Cosatu supports him (Gordhan) now.

“If they don’t do it, we are going to have trouble with regards to the state wage bill,” Koornhof said.

Inkatha Freedom Party (IFP) leader Prince Mangosuthu Buthelezi said the budget was “somehow predictable, both in terms of what it addresses and in terms of what it fails to address”.

Much would depend on whether or not, this time around, declarations of policy would materialise into programmes of action. The most concerning aspect was the insufficient emphasis on economic growth, he said.

African Christian Democratic Party (ACDP) spokesperson Steve Swart said the budget was a pleasant surprise.
“All in all, (it was) a very positive budget in difficult circumstances.”

Freedom Front Plus (FFPlus) leader Pieter Mulder welcomed plans aimed at encouraging the public to save.
He said: “There were a number of positive announcements in the budget.”

United Democratic Movement (UDM) deputy secretary-general Nqabayomzi Kwankwa said his party was happy with the budget overall.

“We feel it was a good speech under circumstances because you must keep in mind that we are operating in an environment where there are declining revenues and ever-increasing demands for expenditure on the government,” he said.

Viola Manuel, executive director of the Cape Chamber of Commerce and Industry (CCCI), said overall the budget was encouraging.

“We support the minister’s call for demand-driven growth and we also thank him for acknowledging the importance of all the social partners working together.

“The move to encourage savings was a sensible one and really a move to lower the risk of the state having to take care of people who had not made provision.”

Tax relief for small and micro business was welcome, but “we should view the tax relief offset by inflation and by the rising input costs”. “If the cost of doing business is increasing, lowering tax only marginally offsets the problem.”

However, South African Chamber of Commerce (SACC) chief executive Neren Rau was concerned about the increase in taxes on business.

“Our biggest concern is the increased taxes on business – capital gains tax and the corporate tax.

“We are a bit concerned about the impact that would have during a time when liquidity is fairly tight,” said Rau.
Gordhan: Challenging but hopeful time

Tabling the budget, Minister Gordhan said it had been crafted at a “challenging but hopeful time”.

“We have to say to our people that economic uncertainty will be with us for some time, yet we have a programme of economic change that can steadily roll back unemployment, poverty and inequality.

“We have demonstrated excellent resilience during the post-2008 crisis. (And) We now need to introduce a new dynamism among all South Africans,” he said.

Reducing unemployment was the centre piece of government’s approach to reducing poverty, but it was not the only measure.

The budget was intended to accelerate growth, expand investment, support economic development and confront poverty and inequality.

Gordhan said South Africa’s finances were in good health. A budget deficit of 4.6% of gross domestic product was projected in the 2012/13 financial year.

It was planned to reduce the deficit to 3% of gross domestic product in 2014/15, and public debt would stabilise to about 38% of gross domestic product, he said.

Special emphasis was given to improving competitiveness in industry, investment in technology, encouragement of enterprise development and support for agriculture.

Education, health and social assistance would remain the largest categories of spending, sustaining and expanding the social wage over the Medium-Term Expenditure Framework period ahead.

The budget continued to support job creation, with a particular focus on unemployed youth.

It also provided for personal income tax relief of R9.5 billion, with further measures to increase tax compliance. Measures were also proposed to invigorate household savings.

Gordhan forecast economic growth would slow to 2.7% in the new financial year – from 3.1% last year – but increase to 4.2% in 2014.

The national government’s net loan debt was set to reach R1.5 trillion in 2014/15.

The minister’s other tax proposals for 2012/13 include a tax incentive to encourage savings, tax relief for micro and small businesses, a 28 cents a litre increase in fuel levies and the usual “sin tax” increases on cigarettes and alcohol.

The monthly state old age pension and the disability and care dependency grants will rise by R60 a month to R1 200, and R1 220 for pensioners over the age of 70.

Foster care grants will go up by R30 to R770, and the child support grant will increase to R280. These would be reassessed if inflation continued to rise.

Gordhan also announced steps to fight corruption in the procurement pipeline, notably a review of all government’s property leases.

Ways to find the billions needed for the National Health Insurance scheme could include an increase in the VAT (valued-added tax) rate, a payroll tax on employers and a surcharge on the taxable income of individuals, he said.

A special R5.8 billion appropriation had been included in the 2011/12 budget to ease the toll burden in Gauteng.

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