Booze, smokes, tyres, fuel and cold drinks in 2016 budget

South Africans had their first glimpse into the financial outlook for 2016 during the budget speech delivered by Finance Minister Pravin Gordhan.

His opening remarks such as, “We are strong enough, resilient enough and creative enough to manage and overcome our economic challenges,” set the tone for elementary principles. This is to say that the Finance Minister spoke to the people, the citizens on the ground that are most affected by budgetary constraints.

Professor Alwyn de Koker of taxation in the School of Accountancy, Wits University said, “They didn’t increase personal taxes but my worry is that they [the government] are setting the stage to prepare South Africans for a massive increase in next year’s budget.”

The personal income tax relief is set at R5.5 billion, mainly to lower-and-middle-income earners.

“In addition, we are obliged to confront the impact of slow growth on our public finances, while continuing to respond to the expectations of citizens and communities,” said Gordhan. This is in reference to improved education, reliable local services and responsive public administration.

Here are some of the basics that were addressed:

• SA is part of the global economy and global volatility affects us negatively

• Gordhan has focused the outlook of the budget on inclusive growth

• Focus is geared to small and medium enterprises and entrepreneurs

• Cutting of unnecessary government spending

• A heavy emphasis on private and public investment in the country.

Dr Kenneth Creamer, economist at the School of Economic and Business Sciences, at Wits University irons out a few wrinkles in the projected growth of the nation. Minister Gordhan projected a meeker 0.9 per cent growth, “This very low economic growth rate, below the population growth rate, is devastating as it will result in falling GDP per capita in South Africa in the year ahead.”

Dr Creamer explains that low growth, is partly due to adverse international conditions, but it is imperative that South Africans work together to remove domestic impediments to growth.

Kevin Dale, a local resident and university student said, “Despite hearing all of the numbers, what worries me is that not enough emphasis was put on tertiary education expenditure.”

Another local resident, Bramley Smith commented, “I must admit that what shocked me the most is the 30 cents per litre fuel levy increase, I travel a lot in my job and that will affect me greatly.”

The tax proposals for 2016 are as follows:

Finally, perhaps what is the most salient point that Minister Gordhan made was, “We cannot spend money we do not have. We cannot borrow beyond our ability to repay.”

To view Finance Minister Pravin Gordhan’s full speech click here.