#Budget2019 in a nutshell

Minister of Finance Tito Mboweni. Picture: Phando Jikelo/ African News Agency (ANA)

Minister of Finance Tito Mboweni. Picture: Phando Jikelo/ African News Agency (ANA)

The finance minister has made it clear government will not take on Eskom’s debt, among other notable undertakings. Here are all the key points of his speech today.

Eskom (& other SOEs)

  • Government not taking on Eskom’s debt
  • Setting aside R23bn a year to support Eskom during “reconfiguration”
  • Support conditional on appointment of chief reorganisation officer (CRO)
  • Finance Minister Tito Mboweni likens reorganisation to “curatorship”
  • Mboweni: The president is right when he says Eskom will not be privatised
  • Contingency reserved revised upwards to R13bn for 2019/20 to respond to possible requests for financial support
  • Support budget neutral “as far as possible”
  • Cabinet considering proposal to end guarantees for operational purposes
  • Mboweni: Summit must be held on where to go with SOEs

Growth and other key figures

  • GDP growth for 2019 revised downwards from 1.7% to 1.5% (2020: 1.7%; 2021: 2.1%)
  • Tax revenue for 2018/19 to undershoot mini-budget estimate by R15.4bn, half of this due to higher than expected VAT refunds
  • Consolidated budget deficit to widen to 4.2% in 2018/19 from mini-budget estimate of 4% (2019/20: -4.5%; 2020/21: -4%)
  • Gross debt to GDP ratio to stabilise at 60.2% in 2023/24, higher than mini-budget projection of 59.6%
  • In 2019/20 government will spend R243bn more than it earns (revenue of R1.58trn and spending of R1.83trn)
  • SA is borrowing R1.2bn each weekday
  • Interest expenditure R1bn per day

Tax announcements

  • No change to personal income tax rates or brackets, slight adjustment to rebates (Revenue of R12.8bn raised this way – collection by stealth)
  • No inflationary adjustment to medical tax credit
  • No changes to tax rates for corporate income tax or VAT
  • Employment tax incentive of up to R1 000 can be claimed for employees earning up to R4 500 (previously R4 000)
  • Sugar tax increase from 2.1 cents per gram to 2.21 cents per gram
  • Carbon tax of 9c/litre on petrol and 10c/l on diesel effective from June 5
  • General fuel levy increase by 15c/litre
  • Road Accident Fund levy increase by 5c/litre
  • Plans to tax electronic cigarettes and tobacco heating products
  • Excise duty on cigarettes to rise by R1.14 to R16.66, and 12 cents to R1.74 for can of beer
  • New Commissioner to be appointed “in the coming weeks”
  • Judge Dennis Davis to assess tax gap (difference between tax due and tax collected)
  • Review of explosion of duty-free shops in SA planned
  • Introduction of export tax on scrap metal explored

Expenditure

  • Baseline expenditure adjusted downwards by R50.3bn since mini-budget
  • Half of the reduction come from adjustments to spending on compensation
  • Older public servants may retire early and gracefully, leading to savings of R4.8bn in 2019/20; R7.5bn in 2020/21 and R8bn in 2021/22
  • Limits on overtime, bonus payments and pay progression planned
  • Staffing of diplomatic missions considered “unjustified”, to be reviewed
  • No salary increase for members of Parliament, provincial legislature and executives at public entities
  • Provisional allocations for financial support to Eskom and Infrastructure Fund offsets baseline reduction
  • Expenditure ceiling revised upwards by R16bn over three years
  • Allocation to Jobs Fund to rise to R1.1bn over three years
  • Old age grant rises R80, foster care R40 to R1 000 and child support grant to R420 in April and R430 in October
  • Help-to-buy subsidy helps first-time home buyers purchase a home. R950 million for pilot phase over three years

Infrastructure Fund

  • Central pillar of budget and reprioritisation
  • It will accelerate R526bn of on-budget projects by bringing in the private sector and development finance institutions
  • In several cases, the private sector will design, build and operate key infrastructure assets
  • Government to commit R100bn over next decade

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