Budget speech without surprises

The Minister of Finance presented his annual budget speech on 26 February 2014 but has not unveiled any surprises.

The budget promises that fiscal prudence remains an overriding consideration in the handling of SA’s public finances. Fiscal sustainability is crucial for South Africa. Positive is that the government focuses on  investment spending as opposed to consumption spending. This is key for growth and job creation.

The budget is R1.25 trillion. R1.1 trillion of that is non-interest spending and it will grow to R1.6 trillion in 2016/7 (by 2%).

The budget deficit (consolidated budget) of 4% of GDP expected for 2013/14 and 2014/15 (R153.1bn), narrowing to 2.8% in 2016/17 (medium term budget projections). The figures for the main budget (before extra-ordinary items) are higher. Real growth in non-interest spending will average 1.9% over next three years.

National Treasury is expecting a 2.7% growth rate this year, with consumer inflation sitting at at 6.2% in 2014.

Pravin Gordhan, Minister of Finance, South Africa (Photo credit: World Bank Photo Collection)

Some details:

• The balance of payments will stay in deficit (6.1% of GDP in 2013, 5.5% in 2016)
• Personal income tax will represent 33.8% of total tax, company tax 20%, fuel levies 4.8%, VAT 26.9%, customs and excise duties 8.2% and other 6.3%
• Measures announced to encourage small enterprise development
• Clarity on valuation of company cars for fringe-benefit tax purposes
• Reforms to tax treatment of the risk business of long term insurers
• The implementation of the carbon tax is postponed by a year to 2016 to allow for further consultation
• Excise duties on alcoholic beverages and cigarettes will increase by between 6.2% and 12%
• Increases in the general fuel levy (12c) and the Road Accident Fund levy (8c) by 2 April 2014. This will push up the general fuel levy on petrol to R2.25 per litre and R2.10 per litre of diesel.

Click here: [Budget Speech 2014]