23 February 2007

With government revenue coming in at R9.4-billion higher than forecast in October, South African Finance Minister Trevor Manuel's Budget for 2007/08 contains something for everyone - including tax cuts for individuals and companies and more money for health, education and welfare. Here are the highlights:

• GDP growth of 4.9% for 2006, projected to average about 5.1% a year over 2007-2009.
• Consumer inflation projected to average 4.7% over 2007-2009.
• A main budget surplus of 0.3% in 2006/07 and 0.6% in 2007/08, projected to move to deficits of 0.1% in 2008/09 and 0.4% in 2009/10.
• Projected real growth in government non-interest expenditure by an annual average of 7.7% over the medium term.
• National budget revenue increases to R475.8-billion in 2006/07 - R9.4-billion more than forecast in October.
• State debt service costs as a percentage of GDP projected to fall from 3% in 2006/07 to 2.1% in 2009/10.

• Net tax relief of R12.4-billion.
• Secondary tax on companies to be reformed and the rate reduced from 12.5% to 10% to help support economic growth.
• Personal income tax relief for individuals amounting to R8.4-billion.
• People younger than 65 years earning below R43 000 will not pay any income tax.
• Retirement fund tax to be abolished to help to boost retirement savings.
• Withholding tax on lump sum pension and provident fund payments to be reduced to zero for persons earning below R43 000 per year.
• Taxes on a litre of petrol or diesel to rise by 10 cents from 4 April.
• Excise duties on tobacco products and alcoholic beverages to be increased:
  • A can of beer to cost 5 cents more.
  • A packet of 20 cigarettes to cost 60 cents more.
  • A 750ml bottle of liquor (spirits) to cost R1.88 more.

• An extra R13.3-billion for the 2010 Fifa World Cup, bringing national government's total contribution to R17.4-billion, made up of:
  • R8.4-billion for stadiums.
  • R9-billion for transport infrastructure.
• An extra R24.6-billion to the provinces for better to health, education, welfare and economic services.
• An extra R5-billion to municipalities for better delivery of free basic services.
• An extra R4.6-billion for education: teacher bursaries, curriculum development and higher education subsidies.
• R11.6-billion for housing and community development.
• R3.7-billion for the government's HIV/Aids programme, and revitalising and modernising hospitals and clinics.
• R2.4-billion for industrial development, science and technology.
• R6.8-billion for justice and crime prevention.
• R4.7-billion for international relations and defence.

Source: SouthAfrica.info reporter and South African Treasury