#Budget2014 Numbers

If like me you found the Budget presentation just a tad on the boring side – may I recommend that you view the video here – THIS is how we want Pravin to do #Budget2015 – and then come back and crunch your way through these numbers whilst imagining a whole new way to present a budget:

• Provincial Equitable Share
• Direct tax down
• Overview: Budget in numbers
• Min Gordhan anchors budget on economic growth
• Education scores big in 2014 Budget
• Health budget to exceed R492bln over three years
• Increases in old age, child grants
• New incentive to support small business
• Eliminating red tape to promote local, foreign investment
• Household debt concerning
• More allocated to boost free basic services
• Billions to be spent on housing
• More tax for beer, cigarettes

Provincial Equitable Share

Total transfers to provinces, 2014/15 – R million
Eastern Cape – 62 000
Free State – 27 041
Gauteng – 85 608
KwaZulu-Natal – 94 080
Limpopo – 50 854
Mpumalanga – 35 707
Northern Cape – 13 057
North West – 30 328
Western Cape – 45 549
Total – 444 423

The provincial equitable share formula is reviewed and updated with new data annually. For the 2014 MTEF, the formula has been updated with data from the 2013 mid-year population estimates published by Statistics South Africa; the 2013 preliminary data published by the Department of Basic Education on school enrolment; data from the 2012 General Household Survey for medical aid coverage; and data from the health sector and the Risk Equalisation Fund for the risk-adjusted capitation index. Because the formula is largely population-driven, the allocations capture shifts in population across provinces, which leads to changes in the relative demand for public services across these areas. The impact of these updates on the provincial equitable share is phased in over three years (2014/15 to 2016/17).

The provincial equitable share formula was updated with 2011 Census data in 2013/14. The incorporation of new Census data for the first time in a decade resulted in significant changes. To give provinces time to adjust to their new allocations, the Census updates were phased in over three years and R4.2 billion was added as a “top-up” for provinces with declining shares over the 2013 MTEF period.

Direct tax down

The primary rebate has been increased to R12 726 per year for all individuals. The secondary rebate, which applies to individuals aged 65 years and over, is increased to R7 110 per year. The third rebate, which applies to individuals aged 75 years and over, is increased to R2 367 per year. The threshold below which individuals are not liable for personal income tax is increased to R70 700 of taxable income per year for those below the age of 65, R110 200 per year for those aged 65 to 74, and R123 350 for individuals aged 75 and over.

45% less income tax payable in 2014/15 for taxpayers below age 65 with a taxable income between R70 700 and R75 000

Decreases across the board for taxpayers below 65:

• 75 000 to 80 000: -27.8%
• Up to 85 000: -20.1%
• Up to 90 000: -15.7%
• Up to 100 000: -10.9%
• Up to 120 000: -6.8%
• Up to 150 000: -4.3%
• Up to 200 000: -4.8%
• Up to 250 000: -3.3%
• Up to 300 000: -3.7%
• Up to 400 000: -3.4%
• Up to 500 000: -2.4%
• Up to 750 000: -2.0%
• Up to 1 000 000: -1.4%

Overview: Budget in numbers

Finance Minister Pravin Gordhan has announced a massive expenditure plan that will be anchored by the National Development Plan (NDP).

Tabling the 2014 Budget in Parliament on Wednesday, Minister Gordhan announced that government’s spending will be R1.25-trillion for the 2014/15 financial year.

He said consolidated non-interest spending will increase to R1.3-trillion by 2016/ 17 – an increase of about 2% per year over the next three years.

Education will get the lion’s share of the pie, with an estimated allocation of R254-billion, followed by health (R146-billion), while R144-billion will go towards social protection.

Some R143-billion will go towards housing and community amenities, while R57-billion will be spent on employment and social security programmes.

When tabling the Medium Term Budget Policy Statement in October, dubbed the mini-budget, Minister Gordhan warned that abusing public finances and resources was harming governance, and implemented austerity measures for top executives relating to expenditure, travel and accommodation.

He also set a debt ceiling for all government expenditure in a bid to decrease the budget deficit.

Minister Gordhan also cautioned against abuse, saying the successful implementation of all government plans relied on sound discipline, hard work, cooperation and sustained improvements in productivity – both in the public and private sectors.

“Our present circumstances oblige us to live and spend modestly and keep a careful balance between social expenditure and support for growth.

“And so in framing the 2014 budget, Mr Speaker, we have reprioritised expenditure within the overall ceiling set in the October Medium Term Budget Policy Statement. The budget deficit will steadily decline over the period ahead.

“Mr President, the next administration will inherit sound public finances, a platform for implementation of the National Development Plan (NDP) and a framework for collaboration with all stakeholders in driving social and economic transformation forward,” he said.

Government spend highlights

To boost job creation, government will continue to build on industry support. Government aims to create 6 million work opportunities by 2019.

About R10.3 billion will go towards manufacturing development incentives, while R15.2 billion will be set aside for economic competitiveness and support packages for businesses. A further R3.6 billion has been allocated for job creation at special economic zones.

Spending on education and training will be higher than any other category. Over the next three years, R78 billion will go towards university subsidies while R34.3 billion will be spent on building schools.

Government will continue to invest in infrastructure to improve people’s lives, and will spend R11 billion in 2014 for new rolling stocks and for upgrading the signalling infrastructure.

To ensure a healthy South Africa, government will spend R77 billion on primary healthcare services and a further R240 billion on public hospitals.

During the debate on President Jacob Zuma’s State of Nation Address (SONA), Health Minster Aaron Motsoaledi announced that a new vaccine, Human Papilloma Virus (HPV), would be introduced to prevent cancer of the cervix.

A total of R600 million has been allocated for the roll-out of this vaccine, and young girls from primary schools will be vaccinated from next month.

To bolster the fight against HIV and Aids, R1 billion will be allocated to the pandemic’s conditional grant in 2016/ 17 to sustain the roll-out of antiretroviral treatment. A total of 2.5-million people are currently under treatment, and 500 000 new patients are expected to join the programme each year.

As the country awaits the full implementation of the National Health Insurance, R19.3 billion will be spent on refurbishing clinics and hospitals, while R1.2 billion will be set aside for contracts of general practitioners.

To bolster housing, six metros have been targeted for a new grant of R300 million per year to build their capacity to plan for integrated human settlements.

To this end, government has set aside R899.2 million in 2014/ 15 for provinces to upgrade sanitation infrastructure.

Over the next two years, R1.9 billion will be spent on eradicating the bucket system and R15.4 billion is for regional bulk infrastructure over the next three years.

Min Gordhan anchors budget on economic growth

Despite the sluggish local economic growth brought about by the 2008 global recession, Finance Minister Pravin Gordhan has not gone back on his 2013 growth projections.

Tabling his 2014 Budget Speech in Parliament on Thursday, Minister Gordhan projected the Growth Domestic Product to increase from 2.7% in 2014 to 3.4% in 2016.

Over the next five years, Minister Gordhan said government would focus its efforts on economic growth. This would be backed-up by plans to increase investment in electricity and transport infrastructure.

Despite the South African economy performing below its potential – which saw growth declining from 2.5% in 2012 to 1.8% in the fourth quarter of 2013, the minister said bold decisions were needed going forward.

He added that an increased spend on public infrastructure would encourage private investment, while a stronger employment growth would contribute to increased household consumption.

“Potential domestic risks to the outlook include further delays to the introduction of new infrastructure, particularly additional electricity capacity, higher inflation due to the weakness of the Rand and protracted labour disputes which could depress consumer and business confidence,” he said.

At the time when President Jacob Zuma took office in 2009, the economy had just shed almost one million jobs and the country’s revenue levels had gone down notably.

South Africa’s debt levels had increased, and the budget deficit widened.

At that point, the National Treasury decided to take bold steps to ensure that the then bleeding economy recovered.

“We stabilised the economy and ensured a recovery. Our response was to implement an aggressive fiscal adjustment. When global trade went into reverse, we took steps to improve competitiveness of businesses within the framework of the Industrial Policy Action Plan.

“We accelerated infrastructure investment and we expanded financial assistance to businesses in distress,” said Minister Gordhan.

He said the response to the crisis was founded on a principle of government, business, labour and communities working together – under the facilitation by the National Economic Development and Labour Council (Nedlac).

“And so, although the great waves of financial turbulence and the slow growth in the developed economies have constrained our economic recovery, we have recorded positive growth since 2010.

“We have more than recovered the jobs that were lost. And we have initiated a coordinated infrastructure investment programme, organised into 17 Strategic Integrated Projects to catalyse opportunities in mining, industry, agriculture and services across the country. We have saved this country from the worst!”

The unemployment rate remains at an average of 24% – which Minister Gordhan said was unsustainable.

He said government had a strategy in place to deal with the high levels of unemployment. This included stepping up the implementation of the Expanded Public Works Programme; the implementation of the Community Work Programme in every municipality by 2017; the introduction of the Youth Employment Tax Incentive last month – which has already recorded 56 000 beneficiaries and the establishment of the Special Economic Zones, industrial incentives and support for small agriculture and labour-intensive sectors.

Minister Gordhan said skills development and Further Education and Training (FET) programmes had been ramped-up while government had stepped-up its support for Small and Medium Enterprises and the fostered partnerships with the private and public sector development agencies through the Jobs Fund.

Deficit to be decreased, inflation to stabilise

Minister Gordhan said despite slower growth, the 2013/14 budget deficit is projected to be 4% of GDP, lower than projected in October.

He said the deficit will narrow to 2.8% of GDP over the next three years, with net debt stabilising at about 45% of GDP in 2016/17.

“Investment is forecast to increase by about 5% a year and the current account deficit will average 5.8% of GDP over the medium term, while consumer price inflation will return to levels within the target band between 2015 and 2016,” he said.

He said the Consumer Price Inflation (CPI) is expected to breach the upper band of the target in 2014, reaching 6.2%, declining to 5.5% by 2016.

Measures to boost growth

Minister Gordhan said over the next three years, inclusive growth – as envisaged by the National Development Plan – will be government’s motto.

To boost growth, he said several measures and investments would be undertaken. These include:

• Allocating R10.3 billion towards manufacturing development incentives in addition to tax relief offered through incentive programmes;
• A R15.2 billiion injection from the Economic Competitiveness and Support Programme to assist businesses upgrade their machinery and increase productivity over the next three years;
• Channelling R3.6 billion to special economic zones to promote value-added exports and create jobs in economically disadvantaged parts of the country;
• Allocating R620 million to the digital broadcast migration programme; and
• To create one million jobs in agriculture by 2030, government will spend R7 billion on conditional grants to 435 000 subsistence farmers and 54 500 smallholder farmers.

Minister Gordhan said pressures from developed economies affected the vitality of currency in emerging economies – including South Africa.

In recent weeks, the Rand has fallen to its weakest against the Dollar. On Thursday, Minister Gordhan said a weaker exchange rate was a risk to inflation, while it supported exporters.

“The global economic outlook remains unsteady – some of the advanced economies have returned to growth, others continue to lag. The slowdown in quantitative easing by the Federal Reserve has caused further uncertainty to financial markets, currency volatility and capital outflows from emerging markets,” he said.

He said government will expand its employment programmes over the next three years and continue to support job creation by the private sector.

To counter unemployment levels, especially amongst young people, government aims to create six million work opportunities over the next five years.

“Increased support and tax relief for entrepreneurs and small businesses is proposed. Incentives for industry are strengthened, including funding for special economic zones,” he said.

Education scores big in 2014 Budget

Education will receive a share of 20% (R254 billion) of government’s consolidated expenditure – higher than any other sector.

This trend, as seen in previous years, is also the case in Finance Minister Pravin Gordhan’s Budget Speech, this time around.

The money will be used to increase access to schooling and improve infrastructure in schools, which serve nearly nine million South African children, Minister Gordhan said, adding that government will build 433 new schools over the next three years.

Post schooling education and training accounts for about 21% of the total education spending, with R21 billion set aside for university subsidies and R19 billion for the National Student Financial Aid Scheme (NSFAS) for bursaries and loans.

Provincial education departments also receive a big portion of the budget to pay teachers’ salaries

More funds for NSFAS

On Wednesday, Minister Gordhan said the allocation to the NSFAS will increase from R5.1 billion poured into the scheme last year, to R6.6 billion in 2016.

This will increase the number of Further Education and Training bursaries to 292 000 and will assist over 236 000 students to attend university in the next three years.

In his speech, the minister noted that access to free education had increased sharply since government introduced no-fee schools in 2007. Today, 60% of schools do not charge fees — up from 40% five years ago.

According to the Budget Review, five million children had access to free education in 2007. This year, the number increased to 8.8 million. In recent years, there has also been a sharp increase in the number of children who attend Grade R. The national school nutrition programme now feeds 8.7 million children.

The Department of Basic Education’s long term plan to improve the quality of education focuses on literacy, numeracy as well as science and languages. The Funza Lushaka bursary scheme for students wanting to teach in public schools is intended to increase the number of qualified teachers. Last year, more than 3 000 graduates qualified for placement in schools in 2014. – SAnews.gov.za

Health budget to exceed R492bn over three years

Government spending on health is expected to exceed R492 billion over the next three years, as part of a plan to strengthen the health system, in preparation for the implementation of the National Health Insurance (NHI) scheme.

Over R19 billion has been earmarked for refurbishing clinics and hospitals.

Budget documents show that national health spending will grow at a higher rate over the next few years in line with the National Development Plan’s vision of a cheaper health sector that works for everyone.

In his fifth Budget Speech on Wednesday, Finance Minister Pravin Gordhan, said the Department of Health’s white paper on the NHI and a financing paper by the National Treasury have been completed and were expected to be tabled at Cabinet shortly.

The roll-out of the NHI is currently being financed by two conditional grants, the nationally managed national health grant and the national health insurance grant, managed by provinces.

More than R221 million will be made available in the 2014 budget for the national health insurance grant to strengthen district health structures.

Minister Gordhan said in addition to hospital and clinic building and refurbishment programmes, about R1.2 billion has been set aside for doctor’s contracts.

More than R300 million will go towards the establishment of an office of Health Standards Compliance. The office will serve as an independent public entity responsible for inspecting health facilities.

About R600 million has been budgeted for the introduction of the new Human Papilloma Virus (HPV) vaccine which prevents cancer of the cervix. The roll out of the vaccine will begin in schools across the country next month, for Grade 4 learners.

Minister Gordhan said improvements in South Africa’s health system over the past five years were reflected in the rising life expectancy, the reduction in infant, child and maternal mortality as well as the increased access to HIV treatment.

“Over the period ahead, enrolment in the HIV treatment programme will expand by 500 000 a year”.

The increase in the number of new patients for ARVs will require an addition R1 billion to the health budget. Currently 2.5 million people are under treatment, said the minister.

Since 2009, government has lowered the child mortality rate by reducing mother-to-child HIV transmission from 3.5% to 2.5%. A campaign to increase the number of medical male circumcisions and HIV testing has also reduced the adult mortality rate.

Increases in old age, child grants

The old age and disability grants will increase from R1 270 to R1 350 in April, says Finance Minister Pravin Gordhan.

The foster care grant will be R830, while child support grants increase to R310 a month in April and R320 in October.

On Wednesday, Minister Gordhan delivered his fifth Budget Speech in the current administration, in which he said the number of people eligible for grants will increase to 16.5 million in the next three years. But the good news is that the recent re-registration of grant recipients and the introduction of a new payment system has lowered the cost of administration. Invalid beneficiaries were removed from the system.

South Africa’s social assistance system is one of the largest in Africa and is government’s most direct means of combatting poverty. Spending on the social grant system accounts for 3% of the GDP and is projected to rise from R118 billion in 2013/14 to R145 billion by 2016. The child support and old age grants are the two largest grant programmes, constituting about 75% of total grant spending.

Over the past decade, the number of social grant beneficiaries has doubled from 7.9 million in 2003 to 15.8 million this year largely due to an expansion of the child support grant.

In 2012, all social grant beneficiaries were required to re-register with the South African Social Security Agency and the process was intended to eliminate fraud and corruption in the social grant system.

In August, 2013, 340 000 old age and disability grants were cancelled because beneficiaries failed to re-register.

New incentive to support small business

With increased calls to bolster entrepreneurship, which is identified as a crucial job driver in the economy, Finance Minister Pravin Gordhan has dug deep to support Small and Medium Enterprises (SMEs) over the next three years.

Tabling the 2014 Budget in Parliament, Minister Gordhan said businessmen had raised concerns recently that they were not receiving enough support in order to sustain their enterprises to levels at which they can contribute to growth.

During his speech, the minister also acknowledged a budget tip from Pretoria resident Sharon Bosii, who suggested that government offer incentives to help small businesses.

“This budget allocates R6.5 billion over three years to support small and medium enterprises,” Minister Gordhan said.

Last year, the minister appointed a Tax Review Committee, headed by Judge Dennis Davis, to review the tax system so that it can support government’s programmes and promote inclusive growth.

On Wednesday, Minister Gordhan said he had accepted two recommendations from the Judge Davis tax committee aimed at easing the compliance burden of small businesses.

“The turnover tax regime will be amended to further reduce the tax burden on micro-enterprises.

“Consideration is being given to replacing the graduated tax structure for small business corporations with a refundable tax compliance credit.

“Amendments will be made to the venture capital company tax regime, and the rules related to access foreign capital will be eased to enhance support for entrepreneurial development,” he said.

Investment in infrastructure

Minister Gordhan said the National Development Plan required government to invest in infrastructure to achieve social and economic transformation.

This, he said, was aimed at ensuring that the economy grows at levels of 5% per year to create jobs and reduce poverty quicker.

To this end, Minister Gordhan said the Presidential Infrastructure Coordination Committee – aimed at rolling out massive infrastructure construction and upgrades across all spheres of government and priority sectors of the economy – was making progress in overcoming backlogs.

He said R847 billion would be spent on infrastructure over the next three years.

Minister Gordhan said investment in the electricity and transport infrastructure was key. He noted that the first unit of the Medupi power station is expected to be completed towards the end of the year.

“Transnet has increased capacity on its coal line. Plans are in place to further expand the coal, iron ore and manganese lines.

“The Passenger Rail Agency of South Africa refurbished 500 Metrorail coaches last year, and its new rolling stock procurement programme will get underway this year,” he said.

He said expenditure on social infrastructure – which includes health, education and community facilities – will increase from R30 billion to R43 billion over the next three years.

Minister Gordhan said priority would be given to programmes aimed at eradicating school infrastructure backlogs and to refurbish clinics and hospitals.

A plan to rehabilitate 35 dams has been completed, he said.

“In 2014/15, a total of R40 billion in infrastructure grants will be transferred to local governments for their water, sanitation, energy and environmental functions.

“The private sector is also making an increasing contribution to infrastructure investment.

“Contracts for 47 renewable energy projects were concluded in 2012 and 2013, many of which are already under construction.

“These will add 2 460 MW of power capacity, and an investment of R70 billion.

“A further R45 billion investment will be contracted this year,” he said.

Eliminating red tape to promote local, foreign investment

Government is working towards cutting more red tape to allow small and established businesses to increase their competitiveness and to promote local and foreign investment.

Tabling his 2014 Budget in Parliament today, Finance Minister Pravin Gordhan said that investment by both the public and private sectors was the lifeblood of creating jobs and growth. He said government was committed to providing policy certainty and a sound investment environment to domestic and foreign investors.

Minister Gordhan said a new framework for investment was being finalised by Trade and Industry Minister Rob Davies, and added that this would place investment at the centre of the country’s economic growth plan.

“We have a number of incentives in place, which have provided substantial benefits to both foreign and domestic investors.

“Moreover, under the guidance of Minister Davies, a new Promotion and Protection of Investment Bill has been released for public comment. This entrenches the rights of all investors, ensuring that property rights are protected, in line with the Constitution.”

Regulatory improvements

Minister Gordhan said government had been engaging business on steps it can take to make it easier to do business in the country.

“Arising out of that process, we will now streamline regulatory licensing approvals for environmental impact assessments, water licences and mining licences.

“As announced by President Jacob Zuma, Parliament is finalising amendments to give effect to this very positive development, which will cut the time it takes to start a mine – from application to final approval – to under 300 days,” he said.

Minister Gordhan also said there was further work in progress to lower the cost structure of the economy through, for instance, improved efficiencies in freight logistics.

“[Communications] Minister Yunus Carrim has published a new policy on broadband, which will in due course lead to modernisation of our communications capabilities.

“Several cities are bringing WiFi connectivity to their environs.

“SARS is taking further steps to lower the cost of tax compliance in South Africa.”

Doing business in the continent simplified

Minister Gordhan said with investment into Africa reaching R36 billion a year, and with 29% of South Africa’s exports having all gone to Africa – resulting in 12% of the country’s dividends arising from the continent – it was time to open up trade and investment for non-listed South African companies.

“Increasing these inflows will be crucial for closing the current account deficit. Foreign assets owned by South African firms are an important source of income, and reduce our vulnerability to future domestic downturns.

“Today, further steps to simplify trade and investment with Africa are announced.

“The HoldCo regime for African and offshore operations will be extended to unlisted companies, and the limits for listed companies will be increased,” he said.

Minister Gordhan said the regime created a simplified tax and foreign exchange framework for companies that trade with Africa.

“South Africa is an important centre for financial services such as fund and asset management.

“We propose new ‘Foreign Members Funds’, which will simplify foreign exposure rules.

“These funds will support South Africa as a hub for African fund management and provide a domestically-regulated channel for investors to obtain foreign exposure.”

Household debt concerning

Finance Minister Pravin Gordhan says government is concerned about the level of over-indebtedness of South African households.

“Cabinet has therefore approved a number of measures to assist such households reduce their debt burden and to stamp out abusive and fraudulent activities of reckless lenders and unscrupulous debt collectors,” Minister Gordhan said.

“Working jointly with the Minister of Trade and Industry, we will jointly commence actions against abusive and unsustainable practices,” he said.

The minister delivered his fifth Budget Speech on Wednesday, the last one for the current administration.

He said despite the rising consumer debt levels, there has been substantial progress in transforming South African households since 1994. The average income of South Africans had increased by over 30% and was expected to continue to rise in the year ahead.

More than 5.9 million jobs have been created by the economy since 1996.

“Near–universal school enrolment and the steady increase in average years of education for men and women have improved the life prospects of millions of South Africans,” said Minister Gordhan.

Access to basic services had improved rapidly across the country and more people than ever had access to housing, education and services. Black participation in the economy had expanded and there had been a transformation of the middle class.

“These are considerable achievements. But they are not enough. There are still fault lines that run deep in the social fabric of our communities and tendencies in the political landscape,” Minister Gordhan said.

He said black economic participation remained incomplete. The economy needed to provide many more opportunities and the State needed to provide more support to enterprises and entrepreneurs. The structure of the economy also had to transform in order to meet the demands of a 21st century global economy and a fast evolving continent.

More allocated to boost free basic services

National government will allocate R105 billion in grants to municipalities over the next two years for free basic services such as water, sanitation, electricity and refuse removal.

Six metropolitan municipalities have also been targeted for a new grant of R300 million per year to build their capacity to plan integrated human settlements.

Tabling his fifth Budget Speech in Parliament on Wednesday, Finance Minister Pravin Gordhan said the integrated city development plans would strengthen long-term city planning and encourage private investment in urban development.

The grant will have R814 million over the next three years.

A further R108 million will be made available as part of human settlements development grant earmarked for housing upgrades in mining towns. Government has also set aside R900 million in the coming financial year to upgrade sanitation infrastructure.

Local government raises revenue in the form of charges and taxes and as a result only 27% of their spending is financed through the division of revenue. However, significant disparities in the municipal tax base have meant that national transfers are important for poor and rural municipalities.

Of the R105 billion grants, 44% will go to metropolitan municipalities and 32% to the 70 most rural local municipalities and the district municipalities that provide services to rural areas.

The Treasury’s budget documents indicate that while much has been achieved in the rollout of municipal infrastructure over the last decade, significant work remains to be done, both to eradicate backlogs and to ensure services are properly maintained over the long term.

Gordhan said the assignment this year of the human settlements function to metropolitan municipalities was a vital intervention in speeding up housing investment and integrated urban development.

Metropolitan and larger urban municipalities are expected to use a combination of grant funds and their own revenue to upgrade informal settlements.

In the 2013/14 financial year, government introduced the integrated city development grant which provided a financial incentive for metropolitan municipalities to concentrate infrastructure funds on more compact urban environments. An addition R356 million will be allocated to the grant, bringing its value to R814 million.

Over the next two years, R1.9 billion will be spent on eradicating the bucket system and R15.4 billion is earmarked for regional bulk infrastructure over three years.

Billions to be spent on housing

The state will build 216 000 houses and connect 905 000 households to electricity over the next two years, Finance Minister Pravin Gordhan said in Parliament on Wednesday.

This is in addition to other housing schemes the state has embarked, in partnership with the private sector and several public-private development institutions.

Delivering his fifth Budget Speech in Parliament, Minister Gordhan said the housing budget for the 2013/14 financial year was R143 billion.

Between 1994 and 2013, government built over 2.7 million houses across the country.

The National Development Plan (NDP) has now recommended that responsibility for housing should shift to municipalities in order to improve coordination of urban programmes. All metros have been directed to implement programmes to overcome dominant spatial patterns.

The Human Settlements spending focus over the next two years will be on transferring grants to provinces and municipalities to fund the delivery of low income housing, the purchase of land to upgrade informal settlements and the upgrade of some informal settlements. The urban settlements development grant is expected to deliver more than 215 housing units and upgrade 92 000 services sites in informal settlements.

The integrated city development grant, which is being introduced in this year’s budget, will ensure that large, low income communities on the urban edge are better connected to centres of economic and social activity through investments in public transport.

The Treasury says municipalities will receive the grants on condition that they produce built environment plans and that these plans support better coordination of investments and are aligned to national development plans.

More tax for beer, cigarettes

If you have been planning to quit smoking, this is probably the best time to do that. Smokers will from now on pay roughly 68 cents more for a packet of cigarettes.

Finance Minister Pravin Gordhan on Wednesday once again announced an increase in the so-called ‘sin taxes’ and hit consumers of alcohol and cigarette smokers where it hurts the most – in their pocket.

A 340ml can of beer will cost 9 cents more, while a bottle of whiskey will go up by nearly R5. The increases take effect immediately.

The general fuel levy will be limited to the inflation-related 12 cents per litre from 2 April and the Road Accident Fund levy will increase by 8 cents.

But, there was also good news coming out of Minister Gordhan’s speech. The Finance Minister announced a personal income tax relief of R9.25 billion and 40% of the relief goes to South Africans earning below R250 000 per year.

In the past five years, the tax register of individuals grew from 5.5 million to over 15 million to include all known economically active individuals. Companies on the tax register now stand at more than 2.3 million.

Minister Gordhan said an increase in the tax-free lump sum amount paid out of retirement funds from R315 000 to R500 000 has also been proposed. It will benefit lower income people who did not benefit from deductible contributions.

In a bid to encourage households to save, Minister Gordhan said legislation to allow for tax-exempt savings accounts will proceed this year.

“Complimenting this tax reform, a new top-up retail savings bond will be introduced by the Treasury this year, allowing for regular deposits into a government retail bond. It will also be accessible to community savings groups such as stokvels,” Minister Gordhan said.

He announced that the requirement from the Income Tax Act, which compels philanthropic foundations to distribute 75% of the money they generate within a year, will be relaxed. The regulations will still ensure that accumulated capital is distributed to worthy causes within a reasonable period.

Carbon tax delayed

Minister Gordhan also said the mooted carbon tax has been delayed and will not be implemented in 2016. He said this was done to allow for further consultation on the proposed tax. – SAnews.gov.za