Highlights of Finance Minister Nhlanhla Nene’s 2015/16 main budget include:
— A budget deficit of 3.9% of GDP is expected for 2014/15, narrowing to 2.5 percent in 2017/18;
— Debt stock as a percentage of GDP is expected to stabilise at 43.7 percent in 2017/18;
— The main budget non-interest expenditure ceiling has been reduced by R25 billion over the next two years;
— Increases in tax rates are set to add R16.8bn to gross tax revenue in 2015/16;
— Real growth in non-interest spending will average 2.1 percent over the next three years and will be more closely aligned to long-term average real GDP growth from 2017/18;
— Government will increase personal income tax rates by one percent for taxpayers earning more than R181,900, and adjust tax brackets and rebates to account for fiscal drag;
— The tax-free threshold for individuals will increase from R70,700 to R73,650;
— Fuel taxes are set to increase by R80.5c/litre. The general fuel levy will increase by 30.5c/litre from April, while the Road Accident Fund (RAF) levy will see a substantial hike of 50c a litre;
— Government will take further steps to combat base erosion and profit shifting;
— Small businesses will be provided with a more generous turnover-tax regime;
— The excise duties on alcohol and tobacco will be raised. The tax on a quart of beer will rise by 15.5c, wine will cost 15c more for a bottle, sparkling wine 48c a bottle, and whisky R3.77 per bottle, and a pack of 20 cigarettes will cost 82c more;
— The electricity levy will temporarily increase from 3.5 cents a kilowatt hour (c/kWh) to 5.5c. The additional 2c/kWh will be withdrawn when the electricity shortage is over;
— An increase in the energy-efficiency savings incentive from 45c/kWh to 95c/kWh is proposed;
— The rates and brackets for transfer duties on the sale of property will be adjusted, eliminating transfer duty on properties below R750,000;
— Government consolidated spending is expected to be R1.35 trillion;
— Education will receive the biggest slice of the budgetary pie with R191.1bn going to basic education, R26.2bn to university transfers, and R10bn to the National Student Financial Aid Scheme;
— The Health budget rises by 8.8% to R157.3bn;
— Government will spend R155.3bn on social grants; and
— The SA Police Service will get R82.7bn, while the defence and state security services will share a R49.4bn allocation.