The good, the bad and the ugly
Once Valentine's Day has come and gone, the next big thing in February is Minister Pravin Gordhan's Budget speech. For most of us, there's not too much love on this subject and it's not nearly as sweet as roses and chocolate. But it's not all negative, so without further ado, let's take a look at the good, the bad and the ugly of the 2014 budget!
The big picture
Although the global economic outlook remains unsteady, South Africa's economy has continued to grow and for 2014 we expect a growth rate of 2.7%. Nice one! While the weaker exchange rate is bad news for globetrotters (think £7 – around R126 for a glass of wine), it's good news for exporters. But back to the Budget. In a nutshell, the key features include:
- Consolidated, non-interest spending will amount to R1.1 trillion in 2014/15.
- National government departments will be allocated about 48% of available funds, provinces 43% and municipalities 9%.
- Government employment programmes will continue to expand as will support for job creation by the private sector
- Increased support and tax relief for entrepreneurs and small businesses is proposed
- There'll be personal income tax relief of R9.25 billion.
Tax revenues have continued to grow and for 2013/14, R1 billion more than projected was collected. In the last 5 years, the tax register has grown from 5.5 million people to over 15 million – big up to those that have done the right thing!
- Benefits to households include a R9.25 billion in income tax relief. About 40% of the relief goes to South Africans earning less than R250 000.00 a year.
- An increase in the tax-free lump-sum amount paid out of retirement funds from R315 000 – R500 000 is proposed
- Legislation that will allow for tax-exempt savings accounts is going to proceed this year, in the hope that it'll encourage us to save.
- Eliminating wasteful spending and corruption is a focus of the 2014 Budget. (No more fancy flights, dinners and shopping sprees for some politicians then!)
- Old age, disability, foster care and child support grants will all increase
- 216 000 houses will be built
- 905 000 households will be connected to electricity
- 11.4 million children will receive the child support grant
- 433 schools will be rebuilt
- The duty rate on traditional African beer remains unchanged.
Unfortunately for those of us that enjoy a tipple, those sin taxes are going up. For all you smokers out there – could this be a good incentive to give up?
- Excise duties on a can of beer will increase by 9 cents, 68 cents on a packet of 20 cigarettes and R4.80 on a bottle of whiskey.
It's not major, but with fuel costing what it does, this is still going to hurt!
- The fuel levy is going up by 12 cents per litre from 2 April and the road accident fund levy will increase by 8 cents a litre. Ouch, that's another 20 cents a litre.
Conclusion Overall, thanks to our taxes, the average income of South Africans has increased by over 30% in the last 20 years; more people than ever have access to housing education and services; more children are going to school and the average number of years spent getting an education has improved.
So, the bottom line? Some pain, but also some gain!