Tax relief and social grant increases

2014-02-27 00:00

CAPE TOWN — Income tax relief of R9,3 billion and massive future spending on social grants are among the main features of this year’s pre-election budget.

Other highlights include a budget deficit that is expected to narrow to 2,8% of GDP by 2016/17, supporting a stabilisation of debt at 44,3% of GDP. Tabling his 2014 Budget in the National Assembly yesterday, Finance Minister Pravin Gordhan told MPs he expected a budget deficit of four percent of GDP for this year and next (2014/15).

Tax revenue this year (2013/14) was expected to be R1 billion higher than projected in the 2013 budget.

Gordhan said real growth in non-interest spending should average 1,9% over the next three years.

A spending ceiling committed government to a cap of R1,03 trillion in 2014/15, R1,11 trillion in 2015/16, and R1,18 trillion in 2016/17.

Over the next three years, government intended to spend, among others, R410 billion on social grants, R15,2 billion on the economic competitiveness and support package, R8,7 billion on settlement of land restitution claims, R7 billion for subsistence and smallholder farmers, R78 billion on university subsidies and R19,4 billion for the National Student Financial Aid Scheme, and R143,8 billion to support municipal infrastructure.

Small enterprise


Tax proposals included steps to encourage small enterprise development, clarity on the valuation of company cars for fringe-benefit tax purposes, and reforms to the tax treatment of the risk business of long-term insurers.

Also proposed are amended rules for VAT input tax to combat gold smuggling; measures to address acid mine drainage; and adjustment of the proposed carbon tax and its alignment with desired emission-reduction outcomes identified by the Environmental Affairs Department.

Consumer price inflation (CPI) was expected to come in at 5,7% for 2013, 6,2% this year, 5,9% next year, and 5,5% in 2016.

Gordhan announced that the old age and disability grants would increase in April — from R1 270 a month to R1 350. The foster care grant would increase from R800 to R830, and child support grant would increase from R300 to R310 a month in April, and to R320 in October.

Sin tax

Increases in excise duties on alcoholic beverages and tobacco would add 9 cents to the price of a 340 ml can of beer and 68 cents to a packet of 20 cigarettes. Whisky would cost R4,80 a bottle more. These increases took effect immediately.

The general fuel levy would increase by 12 cents a litre on April 2, and the Road Accident Fund levy would increase by 8 cents a litre.

Consolidated revenue for 2014/15 was expected to be R1,1 trillion, and spending R1,25 trillion.

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