Trevor Manuel has given what some speculate to be his last budget speech today 11 February 2009. To be honest, the budget is pretty much what was expected. There are some savings on personal tax, smokers and drinkers will pay more while there is a higher fuel levy. As for property, the Capital Gains Tax exclusion threshold was raised from R16000 to R17500.
Trevor Manuel gave the widely anticipated budget speech to parliament earlier today.
The 2009 South African budget, Trevor Manuel's thirteenth, might very well be the last budget with him at the reigns.
In October of last year Manuel said that he has been in his current position too long, and discussed his future with ANC leaders. Colen Garrow, an economist at Brait SA in Johannesburg, says that the national budget for 2009/10 could very well be Manuel's toughest.
Even though Trevor focused a lot on tightening the belts there's still 2bn allocated to FIFA world cup stadiums and related infrastructure.
Thanks to Fin24, here's a snapshot of what the South African Budget has in store for us:
The 2009 budget provides tax relief of R13bn to individuals to counter the effects of inflation (bracket creep).
This means people under 65 years of age will be affected as follows:
- Those earning a total amount of R60 000 will be taxed to an average rate of 1.7% - saving R1 476.
- Those earning R200 000 will be taxed at an average rate of 15.5% - saving R2 426.
- Those earning R750 000 will be taxed at an average rate of 31% - saving R5 526.
The tax threshold for individuals younger than 65 will be R54 200, while it stands at R84 200 for those older than 65.
There's no such luck for companies, though, as no changes were proposed for corporate tax rates.
But there was a break for entrepreneurs as the value-added tax (VAT) registration threshold was raised from R300 000 to R1m.
TAX ON INTEREST AND DIVIDEND INCOME
The annual exemption on interest earned for people younger than 65 years has been raised from R19 000 to R21 000. For individuals over 65 the threshold increases from R27 500 to R30 000. For interest and dividends from foreign investments, the exemption level has been raised from R3 200 to R3 500.
CAPITAL GAINS TAX
The annual exclusion threshold for capital gains tax (CGT) increases from R16 000 to R17 500.
Drinkers will pay more for their favourite tipple with excise duties increasing across the board. Beer is up 7c to 79c per 340ml can, wine by 14c to R1.98c/litre, fortified wine by 32c to R3.72/litre and spirits by R3.21 to R25.05 per 750ml.
Smokers also have to cough up more with excise duties on a pack of 20 rising 88c to R7.70c.
There was a double whammy in the budget for motorists, who have only recently started to feel the benefits of the markedly lower crude oil price.
The fuel levy on petrol will increase by 23c to R1.50/l and by 24c to R1.35/l for diesel ion April 1 this year. But on the same date the Road Accident Fund levy on petrol and diesel increases by 17.5c to 64c/l.
GREEN AND MEAN
The budget proposes reducing the current ad valorem excise duty on the sale of new motor vehicles, opting to introduce an additional excise duty component to take into account carbon dioxide emissions.
Other environment taxes will see an increase in the plastic bag levy to four cents a bag and an introduction of a charge of about R3 on energy-intensive light bulbs.
The international air passenger departure tax will increase to R150 and R80 in the case of flights to Botswana, Lesotho, Namibia and Swaziland.
The main areas in the budget that receive more money are:
- R12bn more for social grants;
- R45bn more for provinces to improve education, health, roads and rural development;
- R10.9bn more for housing, water, sanitation and municipal services;
- R5.4bn more for improving the criminal justice sector (including an overhaul of the fingerprint and DNA databases);
- R6.4bn more for public transport, national roads and rail infrastructure.
- A budget deficit of 3.8% in 2009/10, before recovering to 1.9% by 2011/12;
- GDP growth projected at 1.2% in 2009 (before recovering to 4% by 2011);
- Inflation to fall to 5.8% in 2009;
- Over R780bn of public infrastructure spending planned for next five years; and
- Real growth in consolidated government spending (excluding interest) of 5.1%.