How does the 2016 Budget affect you?
How does the 2016 Budget affect you?
- The budget deficit will fall from 3.2% in 2016/17 to 2.4% in 2018/19 (3.9% in 2015/16).
• Debt stock as a percentage of GDP is expected to stabilise at 46.2% in 2017/18 (43.7% in 2017/18).
• Government will lower the expenditure ceiling by R10bn in 2017/18 and R15bn in 2018/19 by reducing public sector compensation budgets.
- An additional R18.1bn of tax revenue will be raised in 2016/17, with R15bn more in each of the subsequent two years.
- Government has responded to new spending needs without compromising expenditure limits. An amount of R31.8bn has been reprioritised over the medium-term expenditure framework period to support higher education, the New Development Bank and other priorities.
Spending programmes over the next three years
- R457.5bn on social grants.
• R93.1bn on transfers to universities, while the National Student Financial Aid Scheme receives R41.2bn.
• R707.4bn on basic education, including R45.9bn for subsidies to schools, R38.3bn for infrastructure, and R14.9bn for learner and teacher support materials.
• R108.3bn for public housing.
• R102bn on water resources and bulk infrastructure.
• R171.3bn on transfers of the local government equitable share to support the expansion of access of poor households to free basic services.
• R30.3bn to strengthen and improve the national non-toll road network.
• R13.5bn to Metrorail and Shosholoza Meyl to subsidise passenger trips and long-distance passengers.
• R10.2bn for manufacturing development incentives.
• R4.5bn for national health insurance pilot districts.
- An amount of R9.5bn will be raised through increases in excise duties, the general fuel levy and environmental taxes.
• Limited fiscal drag relief of R5.5bn will be implemented for individuals, focusing on lower- and middle-income earners.
• Adjustments to capital gains tax and transfer duty will raise R2bn. The effective rate on capital gains tax for individuals will rise from 13.7% to 16.4%, and for companies from 18.6% to 22.4%. Transfer duty on property sales above R10m will be raised from 11% to 13% from March1 2016 .
• Government proposes to introduce a sugar tax on 1 April 2017 to help reduce excessive sugar intake.
• A tyre levy will be implemented, effective October 1 2016.
• The general fuel levy will be raised by 30c/litre to R2.85/l for petrol and R2.70/l for diesel, effective April 6 2016. The Road Accident Fund levy will stay the same on 154c/l as it will be replaced by the Road Accident Benefit Scheme.
• Tax credits on medical scheme contributions are increased to maintain the current level of relief in real terms.
• The plastic bag levy is increased from 6c to 8c per bag.
• Personal income tax will bring in 37.5% of government revenue, company tax 16.9%, VAT 25.6% and fuel levies 5.5%.
Sin taxes hikes
Beer 11c/340ml; fortified wine 27c/750ml; ciders and alcoholic fruit beverages 11c/340ml; unfortified wine 18c/750ml; sparkling wine 59c/750ml; spirits 394c/750ml; cigarettes 82c/packet of 20; cigarette tobacco 94c/50g; pipe tobacco 27c/25g; cigars 432c/23g.
- GDP growth is estimated 1.3% in 2015, 0.9%% in 2016, 1.7% in 2017 and 2.4% in 2018. This is considerably lower than last year’s estimates.
• Export growth is expected to grow by 9.5% in 2015, 3.0% in 2016 and 4.6% in 2017 while imports will grow an estimated 5.3% in 2015, 3.7% in 2017 and 4.5% in 2017.
• Consumer inflation will fall to 4.6% in 2015, accelerate to 6.8% in 2016 and is then forecast to consolidate somewhat at 6.3% in 2017 and 5.9% in 2018.
• Capital formation is forecast to grow by only 1.1% of GDP in 2015, 0.3% in 2016, 1.4% in 2017 and 2.7% in 2018.
• Household consumption is set to grow by 1.4% in 2015, 0.7% in 2016, 1.6% in 2017 and 2.2% in 2018.
• The balance of payments will stay in deficit (-4.1% of GDP in 2015, -4.0% in 2016, -3.9% in 2017 and 2018).
Social Grant increases
- State old age grant from R1 415 to R1 505 per month.
• State old age grant for over 75s from R1 435 to R1 525.
• War veterans grant from R1 435 to R 1 525.
• Disability grant from R1 415 to R 1 505.
• Foster care grant from R860 to R890.
• Care dependency grant from R1 415 to R1 505.
• Child support grant from R330 to R350.