Annual Budget Highlights - 2019/2020
by Amanda Roothman on 20 February 2019
Compiled by: Amanda Roothman – Exponential Brilliance
Finance Minister, Tito Mboweni delivered his Annual Budget Speech in Cape Town today, 20 February 2019.
Some points to mention:
TAX! TAX! TAX!
- Personal Income Tax
No increase in income tax rates – this means that MORE individuals may fall into a higher tax bracket if they receive a salary increase – this will raise an expected additional R12.8bn in revenue.
Rebates and the tax threshold has been increased from R78 150 to R79 000.
- VAT rate will remain unchanged at 15%
The list of VAT-exempt items will be expanded to include white bread flour, cake flour, and sanitary pads with effect from 1 April 2019 – this will cut tax inflows by an expected R 1.8bn.
- Sin taxes
The raise in sin taxes on alcohol and tobacco is expected to raise an additional R1bn in Treasury. Sin taxes will rise at a rate of 7.4% - 9% - this is above-inflation rate.
Excise duties on a 340ml can of beer will rise by 12c (increase of 7.4%, from R 1.61 to R 1.73)
Excise duties on a box of 20 cigarettes will increase by R 1.14.
A bottle of 750ml wine will cost 22c more. Excise duty total of R 3.15 per bottle.
Sparkling wine will cost 84c more per 750ml, with a total amount of tax being R 10.16 per bottle.
- Medical tax credits
No change in the monthly tax credit – this will increase revenue with approximately R1bn.
As from 5 June 2019, South Africans will be paying 29c more per litre of petrol and 30c more per litre of diesel.
In total, South Africans will be paying R 5.63 in taxes of every litre petrol, and R 5.49 for every litre of diesel.
The SA Revenue Services is being fixed. Revenue collection shortfalls of approximately R48bn, was caused by problems with the Tax Administration Act. In addition to broad economic weakness, and higher than expected VAT refunds.
Over the next six years, Treasury will provide each school child in South Africa with digital workbooks, and text books on table devices, starting with schools that have been historically most disadvantaged, located in the poorest communities.
At this point in time, more than 90% of textbooks as well as workbooks across all grades have been digitised.
The National Health Insurance Bill of 2018 will soon be ready for submission to Parliament. This will enable South Africans to receive free services at the point of care in public and private quality-accredited health facilities.
The Housing Development Agency will construct 500 000 housing units in the next 5 years, R30bn will be provided to municipalities to enable them to fulfil their respective mandates.
Eskom will be unbundled into 3 entities, under the umbrella “Eskom Holdings”:
A R69bn financial support package over 3 years was granted by Treasury, to help Eskom service its debts – although Treasury is not taking over Eskom’s debt – merely supporting Eskom to help stabilise its finances.
The SAA needs a total of R 21.7bn over the next 3 years for the implementation of its turnaround plan, as they are not generating enough cash to repay its maturing debt or cover working capital requirements.
Mboweni mentioned that if he had a choice between SAA and PRASA (Passenger rail Agency of SA) he would ensure that funding would go to the railway system to transport people safely from their homes to their work.
State Owned Enterprises
Funding requests for SAA, SABC, Denel, Eskom and other challenged SOE’s just for them to continue operating, Mboweni asked the National Assembly if SA really need them?
“We want to look after every rand and cent provided, with no free lunch here.”
Cabinet is considering a proposal to end the issuing of guarantees for operational purposes, and expiration dates on these guarantees will be strictly enforced.
by Amanda Roothman on 31 July