Authors: Andisiwe Makinana, Setumo Stone and Hlengiwe Nhlabathi (News24). Government is set to take the drastic step of revising ousted finance minister Nhlanhla Nene’s medium-term expenditure plans, as the economic situation has become a lot more dire since he presented it in October. This unprecedented move was revealed by ministers after an extraordinary ministers’ meeting on the economy this week.
It is my privilege to present the 2015 Medium Term Budget Policy Statement, together with the Adjustments Appropriation Bill and the Division of Revenue Amendment Bill for 2015/16. Honourable Members, global economic growth has slowed. Commodity prices remain depressed and unemployment has increased in many parts of the world. Growth is considerably lower in our economy than we projected in February. This is in part a consequence of the global slowdown, but it also reflects our energy constraint and structural weaknesses in our economy….. DOWNLOAD FULL SPEECH (15 pages) Medium Term Budget Policy Statement – October 2015
Author: Matthew le Cordeur Slow economic growth and a steep decline in commodity prices resulted in R7.6bn less tax being collected in 2015/16, Finance Minister Nhlanhla Nene said in his mini budget on Wednesday. In total, lower growth has resulted in a downward revision of R35bn to gross tax revenue between 2015/16 and 2017/18. The tax revenue outcome for 2014/15 was R986bn, a 9.6% increase on collections in 2013/14 and R7.3bn higher than the 2015 budget target, led by strong growth in personal income tax (PIT). Overall, gross tax revenue has been revised downward by R7.6bn in 2015/16, R14.6bn in 2016/17 and R12.4bn in 2017/18 compared with the projections tabled in the 2015 budget. South Africa’s economy retracted by 1.3% in the second quarter and the rand fell to its lowest since 2011 because of electricity constraints, low productivity and poor performance in emerging markets.
Cape Town – Finance Minister Nhlanhla Nene has not strayed much from the more austere fiscal path adopted last year and his mini budget tabled in parliament on Wednesday did not contain any big surprises. With the economy having slowed down, Nene is aware of the limited resources at his disposal. He seems to be honest about the restraints and negative realities, but reluctant to raise taxes. He is prepared to use austerity measures, reallocations, the sale of state assets and contingency reserves to prevent the budget deficit and borrowing from creeping up. He also recognised the need to get a confident private sector behind efforts to grow the economy. Nene said at a press conference before his speech that there is no way “this economy can grow if the private sector is not on board”. Let’s hope that government as a whole shares his thinking and approach.
Cape Town – The door for an increase in South Africa’s 14% value-added tax (VAT) remains open, according to Finance Minister Nhlanhla Nene. Speaking to media ahead of his mini budget speech on Wednesday, Nene said the Davis Tax Committee “will look very closely at the need” for an increase in VAT and it will “look at any other taxes in our scheme”. Former finance minister Pravin Gordhan launched the committee in 2013 to investigate the country’s tax policy framework to help boost employment, fiscal sustainability and growth. Since 2014, the Davis Tax Committee has published reports on small business taxation, VAT, base erosion and profit shifting, estate duty and mining taxation. While VAT might be perceived as regressive, comparative studies show that South Africa’s overall fiscal system is strongly redistributive, the Treasury said in its mini budget.
Author: Maya Fisher-French Johannesburg – Despite student protests outside parliament, Finance Minister Nhlanhla Nene released the medium-term budget policy statement on Wednesday. Here are some points worth highlighting: Not unexpectedly, there is a shortfall in tax collection this year of R7.3bn – the national treasury now expects to collect R35bn less from tax over the next three years than originally planned. However this is from lower corporate tax and value-added tax (VAT) collections – personal income tax collections exceeded expectations by R2.1bn. Given this shortfall in tax revenue, we can expect more taxes in the 2016-2017 budget. There was direct reference to VAT, although Nene was clear that a final decision had not been made. He also alluded to a wealth tax. Given the protests around university fees, would the government have the stomach to hike VAT? It’s less likely that wealthy taxpayers would march on parliament!