24 February 20:24
Despite speculation that South Africa may be facing a new wealth tax, Finance Minister Tito Mboweni announced no new major taxes when he tabled the 2021 Budget in Parliament on Wednesday afternoon.
Proposed tax increases over the medium term have also been done away with, while SA's tax revenue shortfall was lower than expected.
There was a measure of tax relief for lower and middle-income households, as well as a decrease in the corporate tax rate from 28 to 27%.
Mobweni also announced an additional R3 billion to aid SARS’ crime-busting efforts.
The budget includes almost R20 billion in funds for the purchase and delivery of vaccines over the medium term. Unlike previous years, Eskom and SAA were not front and centre on Wednesday.
But Treasury did announce that the state-owned airline's business rescue practitioners had requested R3.4 billion in funding has not been granted yet as it still needs to be "interrogated".
Meanwhile, an allocation of R7 billion will be made to the Land Bank over the medium term.
ICYMI | Have a look at our budget 2021 content:
BUDGET IN A NUTSHELL | You won't pay more tax to bankroll govt's R19.3bn vaccine drive
WATCH | South Africans to fork out more tax for booze, tobacco
TAX CALCULATOR | Find out how the tax changes impact you
TOP STORIES | We have you covered:
Treasury to spend R19.3bn buying Covid-19 vaccines
No new tax measures - but you will pay more if you drink and smoke
SARS allocated additional R3 billion to drive digital strategy, clampdown on non-compliance
Mboweni spies public service savings as court battle looms
We are not made of money, Mboweni warns MPs on debt
It's as bad as they say: Mboweni's budget acknowledges jobs crisis
Covid-19 worsens the fate of state-owned enterprises and several risk a debt default- Treasury
FULL SPEECH | Download the speech below:
24 February 19:22
That's the end of Fin24's live coverage of the budget.
For an overview of the day's key takeaways, have a look at Khulekani Magubane and Lameez Omarjee's wrap below.
24 February 19:19
Wrapping up, Mthombeni says she hopes that future budgets will prioritize making South Africa the financial hub of Africa.
Ndlovu says SA is loosing out on the continent - and is viewed as a "has been" in the fintech space. The question to be asked is what sectors the country will be strong in in the next ten years.
That's a wrap.
24 February 19:14
Skenjana, speaking about his outlook for the SA economy as a whole, says it will be story of mixed fortunes.
Tourism will continue to take a beating, for example, while logistics could see growth.
SA's also has too much industry concentration, meaning it is tough for small businesses to become medium-sized businesses, he notes.
He notes that parts of SA's agriculture industry - such as fruit or nuts - are doing very well. Here SA has a comparative advantage in a global context.
24 February 19:10
Asked about high commodity prices - which have given miners on the JSE a boost, Mthombeni says SA shouldn't bet on the positive cycle continuing.
Ndlovu, meanwhile, notes that load shedding means there is an upper limit to what the commodity boom can achieve.
"The lights go out," she says.
Growth has to be looked for in less energy-dependent sectors.
The commodity boom is "good luck," she notes, but SA needs to be making its own luck.
24 February 19:03
Asked about Eskom - which didn't not feature prominently in this year's Budget, Ndlovu says it is likely that it will again take centre stage at future budgets.
Without functioning municipalities, Eskom will not able to be successful, she states.
Skenjana notes that as there is a move towards self generation, the question to be asked is what will the impact on municipalities be, given that many rely on markups on electricity sales for the bulk of their income.
Municipalities, like businesses, must become financially sustainable to survive, he says.
24 February 18:56
Mthombeni notes that unions have played a key role in SA, but now can form an obstacle to implementing policies.
The mining sector, she notes, should be a booming industry but the relationship between unions and corporates has become "messy".
"There are many sparks of growth we could have had in our economy where those relationships didn't work out".
Ndlovu says it is vital that there is a better connection between a community, the municipal assets of the community and public representatives, but notes that this has proven to be extremely tricky to pull off.
24 February 18:46
Mthombeni says that the state wants people to now go and spend. This is shown by the tax relief for the lower and middle-income households, and the reduction in the corporates tax rate from 28% to 27%.
She adds the vaccine rollout has to be done successfully for SA to reinvigorate the economy, with Treasury hoping that, in time, this will boost tax revenues.
Asked about boosting economic growth, Ndlovu notes there is a limit on how much government can spend.
She says it is important that government spending is focused on the right programs that compliment, but do not crowd out private sector investment.
State spending must be focused on the right things, such as value-creating infrastructure.
Skenjana says a key question is whether money being spent productively. Social spending he says, is not an impediment o development. For Skenjana, the biggest risk item are SA's unsustainable municipalities.
Until the municipalities are sustainable, SA's wont be able to get the right kind of road, water and telecom investment it needs, he says.
24 February 18:30
Skenjana, says the issue with infrastructure projects is not funding, but operation.
Asked about the public sector wage bill, he notes that it stated accelerating post the financial crisis in 2008/9 to spur some economic activity and participation.
The state invested in the public sector works programme, but did't link that to the private sector form an absorption point of view. So the job opportunities didn't materialise into "job realities".
Employment has been boosted in healthcare, education and police over the past 12 years, he notes.
Skenjana says the average 7.3% rise in the public sector wage bill has not been unpacked enough. This is a total increase, he notes, not an average annual increase per employee.
"When you are looking at public sector wage participants, they haven't realized a 7.3% increase in public sector wages over the period".
Conversations around the public sector wage bill are missing a lot of texture and context, he notes.
24 February 18:21
Asked if the budget is just a "reprieve" and whether SA is essentially in the same position as it was last October, Mthombeni states that the "how" of government executes its plans will be key.
The path to bringing down the budget deficit is still not clear, she says. Capacity needs to be created.
Ndlovu says the question s how t get different results from a "declining" public servce.
"We have lost a public brain drain that is immeasurable".
More technical capacity is needed for government plans to be successfully instituted, she says.
She says she hoped that zero-based budgeting will be able to put some discipline into the system. The impacts of previous programs needs to be justified.
'How do we attract talent back?" she asks.
24 February 18:15
Fin24 columnist Ndlovu says the "tiny" bit of tax relief was welcome.
Mthombeni, an analyst at Intellidex, says that Mboweni outperformed the low expectations that had been set. In the end, the story he could tell was better than what some people feared.
Skenjana, chief economist at IQbusiness, says the misappropriation of funds remains a concern as outlined by the Auditor General, and there hasn't been a conversation about how capacity can be built to "clean up our balance sheet".
He notes that corporate income tax has been falling for years.
24 February 18:08
Fin24's analysis of the budget has kicked off.
Fin24 editor Ron Derby will be in conversation with Zama Ndlovu, Nolwandle Mthombeni, Sifiso Skenjana.
24 February 17:59
Want to know how the tax changes announced by Mboweni impact you?
Try out Fin24's calculator below.
24 February 17:24
The beer association of South Africa, meanwhile, has reacted that it is "shocked" about an increase in excise taxes on beer.
"This is a kick in the teeth for everybody in the beer value chain, and especially small craft brewers – whose businesses have been shattered by 19 weeks of restricted trade," the group states.
"Minister Mboweni’s announcement to increase excise taxes by 8% for the forthcoming financial year will be truly detrimental to our efforts to save jobs and livelihoods within the beer industry".
Mboweni announced today that a 340ml can of beer or cider will cost an extra 14 cents.
24 February 17:19
24 February 17:11
With that the briefing has come to an end.
But Fin24's converge of the budget is set to continue.
At 6pm Fin24 editor Ron Derby will host a live panel discussion with leading economists and analysts.
The panel will consist of:
* Fin24 columnist Zama Ndlovu;
* Nolwandle Mthombeni, an analyst at Intellidex; &
* Sifiso Skenjana, chief economist at IQbusiness
24 February 17:08
Edward Kieswetter, the commissioner of the South African Revenue Service, is now asked a question about revenue collection.
While revenue collection was lower than projected in February last year before the pandemic struck, it was higher than what was projected in the medium-term budget last year.
Kieswetter says the criminal economy is the only economy that is expanding at a rapid rate.
He notes that SARS will, among other things, increase its use of data to boost its predictive capabilities, to help boost state coffers.
24 February 16:59
A question about the R10 billion for the rollout of vaccinations over two years.
Will it cover enough vaccines to reach heard immunity?
Mampho Modise says the figure comes from talks with the department of health.
Some will be placed in a contingency reserve to be easily accessible.
24 February 16:56
Tshepiso Moahloli, the acting head of Treasury's Asset and Liability Management, now reacts to a question about Eskom's debt.
She says that it is not up to Treasury to answer questions about how the state-owned power utility will cut its debt burden, and these questions should be posed to Eskom itself.
24 February 16:49
Mboweni is now asked about the public sector wage bill.
A planned reduction in the state wage bill is a key part of the government's plan to reduce spending.
Mboweni starts off my noting that negotiations are currently taking place for the next three-year agreement between the state and public sector unions.
Mogajane now deals with the tricky question of why - if discussions with public sector unions are still ongoing about the next wage deal, reductions to public sector wage spending have already been included in budget estimates.
"At some point.....a number must be there. We have done this for the past 20 years. There have always been estimates [with] certain assumptions in them," he says.
"That in itself does not dictate what will happen in the public sector bargaining council."
He says the number could change. The budget is a "statement of political intent," adding that negotiations can deliver a higher or lower number.
24 February 16:41
24 February 16:41
24 February 16:25
Mboweni says that SA and the World Bank will likely "find each" other on a proposed loan.
Moving on to the commission of inquiry into state capture, Mboweni says the commission must "finish their work".
He says the work being done by the commission is less that that done by the commission of inquiry into the Public Investment Corporation.
"The one just keeps going on and on"
Mboweni says he doesn't think he will sign off on more funding for state capture commission.
Mogajane says there is currently no provision for an extension in the current budget framework, adding that if there is an extension, funds will need to be reprioritized from within the department of justice.
24 February 16:17
Mampho Modise, deputy director-general for public finance, now says that state couldn't "really protect social grants".
This comes in response to a question about why social grants were given below-inflation increases.
"These are the years we really have to consolidate," she says.
She noted that there were "small" increases for the grants.
She said in future social grants could be reviewed.
Mboweni said there is "no need to be apologetic" about the below-inflation increases for the grants.
"The allocations that were made is what we could afford," he states, adding that social services already occupy 56% of the budget.
24 February 16:15
A question is asked about whether the budget includes new money for Eskom.
Mboweni says there has been "no substantive request by Eskom" so there should be "no misunderstanding".
24 February 16:08
The media briefing is about to start.
In response to a question, Mboweni says there is no allocation in the budget for SAA and grants have not been cut.
He says the request by SAA's business rescue practitioners of R3.4 billion in funding has not been granted yet as it still needs to be "interrogated".
24 February 16:06
The SA Canegrowers Association, has welcomed the decision to not increase the sugar tax.
"Although we had called for a reduction in the sugar tax, Minister Mboweni’s budget adds no additional obstacles to the sticky path ahead for the industry’s recovery and the one million livelihoods that depend on our industry."
24 February 16:03
As reactions continue to trickle in, Andre Cilliers, Currency Strategist at TreasuryONE, says that in spite of positive market reactions from income taxes not being raised, the budget included troubling projections.
24 February 15:42
With the budget speech done, attention will now turn to Mboweni's post-budget briefing, which is set to kick off at 4pm.
Fin24 will be streaming the briefing live and providing updates.
24 February 15:35
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24 February 15:32
As Fin24's Lameez Omarjee writes, the state is projecting to spend a total of R19.3 billion on vaccines.
Read her article below.
24 February 15:27
The DA's Finance spokesperson, Geordin Hill-Lewis, has accused Mboweni of perpetrating a "tax con"
"Minister Mboweni said he wouldn’t increase taxes. Then he increased petrol tax by 27 cents a litre," said Hill-Lewis in a statement.
He said the minister's commitments to getting debt under control by 2025 and cutting the wage bill were "welcome".
He continued: "These are not new pledges, they were contained in the October 2020 MTBPS. Nevertheless, we are pleased Minister Tito Mboweni stuck to these targets."
Hill-Lewis said that, by raising the petrol tax, the cost of living for every South African will increase.
"Taxi and bus fares will go up, as will food prices, as goods will cost more to move around the country."
He also argued that the plan to pay for vaccines was "inadequate", saying that around R35 billion is needed.
24 February 15:19
As Fin24 journalist Khulekani Magubane's notes in the piece below, Mboweni acknowledged that despite government efforts to boost job creation and soften the blow for those who lost their jobs in the past year, the unemployment crisis in South Africa is showing few signs of letting up.
24 February 15:17
The first reactions to Mboweni's address are starting to come in.
RMB Chief Economist Ettienne Le Roux writes: “Kudos to the finance minister for digging in his heels; instead of buckling under constant pressure to spend more, he remains steadfast in pursuit of fiscal discipline”.
“Spending restraint remains a more effective tool than tax hikes to help achieve debt stabilization. In this respect, withdrawing last year’s proposal to raise an additional R40 billion over the medium term through tax measures is welcome news”.
24 February 15:12
24 February 15:00
24 February 14:58
The minister is now thanking all and sundry, including the "millions of South Africans who faced, and continue to face, enormous difficulties and challenges".
And with that he is done.
The Aloe Ferox has not made an appearance.
24 February 14:57
The minister is now starting to wrap up - saying that SA must avoid a sovereign debt crisis.
He says the budget he has tabled today will allow govt debt to stabilise at 88.9 per cent of GDP in 2025/26. This is lower than the figure of 95.3% of GDP by 2025/26 presented at the medium-term budget last year.
24 February 14:55
The minister says that the annuitisation for provident funds will take effect from 1 March 2021.
"Provident fund members will continue to enjoy a tax deduction on their contributions."
24 February 14:53
The minister says the Department of Justice and Constitutional Development has been allocated an additional R1.8 billion to "support our brave law enforcement agents in the fight against crime and corruption".
"SARS, SARB and the Financial Intelligence Centre are working jointly on combating criminal and illicit cross-border activities through an inter-agency working group. This group has completed 117 investigations, and found R2.7 billion for our fiscus," he adds.
24 February 14:52
Speaking of zero-based budgeting, Mboweni says that National Treasury is finalising the framework to implement zero-based budgeting across government.
"This will be done through spending reviews which have been used internationally to achieve spending efficiencies. These reviews are already underway and will shape this framework," he says.
The minister says NT's aim is to produce "significantly re-costed budgets from 2022/23".
24 February 14:49
The minister says that SA's six busiest border posts to other African countries will be upgraded and expanded. He says that Beitbridge will be first in line.
The bust border crossing was built in 1929 and last upgraded in 1995.
24 February 14:46
The finance minister now gives an update on social assistance grants:
1. A R30 increase for the old age, disability and care dependency grants to R1890.
2. A R30 increase in the war veterans grant to R1910.
3. A R10 increase in the child support grant to R460.
4. A R10 increase for the foster care grant to R1050.
24 February 14:45
Speaking of alcohol, Mboweni says that it is "clear" that excessive alcohol consumption can lead to "negative social and health outcomes".
"Consumers do react to price increases, and higher prices should lead to lower consumption of alcohol products with positive spinoffs."
24 February 14:42
Mboweni now gives an update on sin taxes, which increase every year.
a. a 340ml can of beer or cider will cost an extra 14c.
b. a 750ml bottle of wine will cost an extra 26c
c. a 750ml bottle of sparkling wine an extra 86c
d. a bottle of 750 ml spirits, including whisky, gin or vodka, will increase by R5.50
e. a packet of 20 cigarettes will be an extra R1.39c
f. 25 grams of piped tobacco will cost an extra 47c
g. And a 23 gram cigar will be R7.71 more expensive
24 February 14:40
Speaking of taxes, Mboweni says there will be no large announcements.
* The corporate income tax rate will be lowered to 27 per cent for companies with years of assessment commencing on or after 1 April 2022.
*Personal income tax brackets will be increased by 5 per cent, which is above inflation.
"This will provide R2.2 billion in tax relief. Most of that relief will reduce the tax burden on the lower and middle-income households. This means that if you are earning above the new tax-free threshold of R87 300, you will have at least an extra R756 in your pocket after 1 March 2021," he says.
*Fuel levies, meanwhile, will increase by 27 cents per litre.
24 February 14:36
24 February 14:35
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24 February 14:30