Budget 2014: Relief for taxpayers

tax

Cape Town – Income tax relief of R9.3bn 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 on Wednesday, 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 R1bn 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 R1.03trn in 2014/15, R1.11trn in 2015/16, and R1.18trn in 2016/17.

Over the next three years, government intended to spend, among others, R410bn on social grants, R15.2bn on the economic competitiveness and support package, R8.7bn on settlement of land restitution claims, R7bn for subsistence and smallholder farmers, R78bn on university subsidies and R19.4bn for the National Student Financial Aid Scheme, and R143.8bn to support municipal infrastructure.

Small enterprise development

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 the 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 9c to the price of a 340ml can of beer and 68c 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 12c a litre on 2 April, and the Road Accident Fund levy would increase by 8c a litre.

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

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