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South Africa 2015 National Budget Speech Summary.
The 2015 budget proposal from South Africa's National Treasury outlines a budget deficit of 3.9% of GDP for 2014/15, expected to narrow to 2.5% by 2017/18, alongside a stabilization of debt stock at 43.7% of GDP. Key tax changes include increases in personal income tax rates for high earners and adjustments in transfer duties aimed at providing relief to middle-income homebuyers. The government plans to increase expenditure significantly on social services, educational infrastructure, and health, while ensuring that real growth in non-interest spending aligns with long-term GDP growth.
South Africa 2015 National Budget Speech Summary.
- 1. TAX PROPOSALS National Treasury Department: REPUBLICOF SOUTH AFRICA national treasury BUDGET AT A GLANCE MACROECONOMIC OUTLOOK SUMMARY Percentage Change 2014 2015 2016 2017 Estimate Forecast Household consumption 1.2 2.0 2.6 0.3 Capital formation -0.6 2.2 3.4 8.3 Exports 3.39.0 4.6 0.5 Imports -0.3 4.6 5.53.5 Gross domestic product 1.4 2.0 2.4 0.3 CPI 1.6 4.3 9.5 5.7 Balance of payments current account (percentage of GDP) -5.8 -4.5 -4.9 -5.2 CONSOLIDATED GOVERNMENT FISCAL FRAMEWORK 2014/15 2015/16 2016/17 2017/18 R billion/percentage of GDP Revised estimate Medium-Term Estimates Revenue 1 091.0 1 188.9 1 331.5 1 439.5 Percentage of GDP 28.1% 28.4% 29.3% 29.2% Expenditure 1 243.4 1 351.0 1 448.8 1 561.7 Percentage of GDP 32.0% 32.2% 31.9% 31.7% Budget balance -152.4 -162.2 -117.3 -122.2 Percentage of GDP -3.9% -3.9% -2.6% -2.5% Gross domestic product 3 879.9 4 191.8 4 538.8 4 926.1 CONSOLIDATED GOVERNMENT EXPENDITURE BY FUNCTION, 2014/15 2017/18 2014/15 2015/16 2016/17 2017/18 2014/15– 2017/18 R billion Revised estimate Medium-term estimates Average annual growth Basic education 189.5 203.5 216.0 227.8 6.3% Health 144.6 157.3 167.5 177.5 7.1% Defence, public order and safety 163.0 171.2 181.2 192.7 5.7% Post-school education and training 56.6 62.2 65.6 69.6 7.1% Economic affairs 189.4 206.2 219.5 225.5 6.0% Local development and social infrastructure 176.6 199.6 210.2 223.8 8.2% General public services 64.7 64.4 66.8 69.8 2.6% Social protection 143.9 155.3 166.0 176.5 7.0% Allocated expenditure 8.29216.91214.8211 %5.64.3631 Debt-service costs 115.0 126.4 141.0 153.4 10.1% Unallocated reserves – 5.0 15.0 45.0 – Consolidated expenditure 4.3421 8.84410.1531 %9.77.1651 P.T.O TAX REVENUE 2015/16 Fuel levies 5.1% Customs and excise duties 7.0% VAT 26.2% Other 6.6% Corporate income tax 18.7% Personal income tax 36.4% A budget deficit of 3.9 per cent of GDP is expected for 2014/15, narrowing to 2.5 per cent in 2017/18. • Debt stock as a percentage of GDP is expected to stabilise at 43.7 per cent in 2017/18. • The main budget non-interest expenditure ceiling has been reduced by R25 billion over the next two years. • Increases in personal income tax rates and the general fuel levy are set to add R16.8 billion to gross tax revenue in 2015/16. • Any additions to personnel headcount for 2015/16 and 2016/17 will be paid for from existing allocations. • Real growth in non-interest spending will average 2.1 per cent over the next three years and will be more closely aligned to long-term average real GDP growth from 2017/18. • Capital remains the fastest-growing item of non-interest spending over the medium term, with compensation and goods and services growing slowest. SPENDINGPROGRAMMES Over the next three years, government will spend: • An addition 7.9 per cent per year, increasing expenditure from R1.24 trillion in 2014/15 to R1.56 trillion in 2017/18. • At least 60 per cent of non-interest expenditure to improve social services and alleviate poverty. • R647 billion on basic education, including R36.7 billion on school infrastructure. • R634 billion on local development and social infrastructure, including R145.5 billion on municipal infrastructure. • R502 billion on health, with R46.6 billion on the HIV and AIDS conditional grant. • R498 billion social protection. • R197 billion on post-school education and training. • R18 billion on providing free meals to over 9 million learners. BUDGETFRAMEWORK • A budget deficit of 3.9 per cent of GDP is expected for 2014/15, narrowing to 2.5 per cent in 2017/18. • Debt stock as a percentage of GDP is expected to stabilise at 43.7 per cent in 2017/18. • The main budget non-interest expenditure ceiling has been reduced by R25 billion over the next two years. • Increases in personal income tax rates and the general fuel levy are set to add R16.8 billion to gross tax revenue in 2015/16. • Any additions to personnel headcount for 2015/16 and 2016/17 will be paid for from existing allocations. • Real growth in non-interest spending will average 2.1 per cent over the next three years and will be more closely aligned to long-term average real GDP growth from 2017/18. • Capital remains the fastest-growing item of non-interest spending over the medium term, with compensation and goods and services growing slowest. NATIONAL BUDGET 2015
- 2. Consolidated Government Expenditure R1.35 Trillion| 8.7% Social services R777.9 billion | 9.4% NationalTreasury:Budget2015Highlights | Percentages reflect growth relative to 2014/15 estimated outcome R72.3bn | 5.8% Economicinfrastructure andnetworkregulation R69.7bn | 7.8% Industrialdevelopment, tradeandinnovation R64.1bn | 13.6% Employment,labouraffairs andsocialsecurityfunds R191.1bn | 7.6%Basiceducation R26.2bn | 8.6%Universitytransfers R25.3bn | 15.3% Skillsdevelopment andadulteducation R13.1bn | -0.3%Educationadministration R10bn | 8.2% NationalStudent FinancialAidScheme R66.7bn | 7.6%Districthealthservices R30.2bn | 6.3%Provincialhospitalservices R26.4bn | 18.2%Otherhealthservices R25.9bn | 5.9%Centralhospitalservices R8.1bn | 9.7% Facilitiesmanagement andmaintenance R53.5bn | 8.4%Old-agegrant R47.8bn | 10.2%Childsupportgrant R20.2bn | 6.6%Disabilitygrant R16.7bn | 9.1%Provincialsocialdevelopment R8.5bn | -2.5%Othergrants R65.2bn | 12.9% Municipalequitableshare andinfrastructuregrant R49.3bn | 13.2% Humansettlements, waterandelectrification programmes R33.1bn | 12.4% Otherlocaldevelopment andsocialinfrastructure R10.7bn | 4.8% Ruraldevelopment andlandreform R41.3bn | 15.8%Publictransport R8.5bn | 4.8% Policyoversightand grantadministration R38.6bn | 4.2% Generalpublic administration andfiscalaffairs R12.3bn | -0.3% Executiveand legislativeorgans R7.1bn | -5.8% Externalaffairs andforeignaid R6.3bn | -18.4%Homeaffairs R49.4bn | 4.0% R39.1bn | 4.6% R82.7bn | 5.7%Policeservices Defenceand statesecurity Lawcourts andprisons Economic affairs R206.2bn 8.8% Defence, public order and safety R171.2bn 5.0% Debt- service costs R126.4bn 9.9% General public services R64.4bn -0.6% Education R265.7bn 8.0% Health R157.3bn 8.8% Social protection R155.3bn 7.9% Local development and social infra- structure R199.6bn 13.0%
- 3. PERSONAL INCOME TAX TRANSFERDUTY SIN TAXES FUEL AND ROAD ACCIDENT FUND LEVIES SMALL BUSINESS TAX 4 HOW PERSONAL INCOME TAX CHANGES AFFECT YOU? TRANSFER DUTY RELIEF RISE IN TOBACCO AND ALCOHOL EXCISEDUTIES INCREASE IN THE GENERAL FUEL AND ROAD ACCIDENT FUND LEVIES MORE BENEFITS FOR MICRO BUSINESS T he 2015 Budget provides some changes to personal income tax, including adjustments to tax brackets and rebates to provide relief from the effect of inflation.This Budget sees an increase in marginal tax rates for individuals earning more than R181 900 and an increase in medical tax credits. T he 2015 budget also provides homebuyers in middle income households relief on transfer duties. From 1 March 2015, transfer duty will be eliminated on all property acquired up to R750 000. In addition there will be a decrease on transfer duty for properties acquired Excise duties on alcoholic beverages (particularly beer, sparkling wine and spirits) will increase by between 4.8 and 8.5 per cent. The increases in excise duties are as follows: The general fuel levy and the Road Accident Fund levy will increase by 30.5c per litre and 50c per litre respectively from 1 April 2015. This will push up the general fuel levy to R2.55 per litre of petrol and to R2.40 per litre of diesel. Individual taxpayers who earn below R500 000 a year will benefit from tax relief. The amount an individual can earn before they are required to pay tax has been adjusted for the tax year that runs from 1 March 2015 to 29 February 2016 as follows: up to around R2.6 million and an increase in transfer duty payable for properties above R2.6 million. Transfer duty rates applying to property acquired on or after 1 March 2015 by any person (including companies, close corporations or trusts) are as follows: The new tax thresholds are due to increases in tax rebates for individual taxpayers: TAX THRESHOLDS TAXYEAR: 2014/15 TAXYEAR: 2015/16 Below age 65 R70 700 R73 650 Age 65 to 74 R110 200 R114 800 Age 75 and over R123 350 R128 500 TAX REBATES TAXYEAR: 2014/15 TAXYEAR: 2015/16 Primary (for all taxpayers) R12 726 R13 257 Secondary(aged65andover) R7 110 R7 407 Tertiary (aged 75 and over) R2 367 R2 466 Tax payable for the tax year ending 29 February 2016. TAXABLE INCOME OF INDIVIDUALS (R) TAX PAYABLE (R) 0 to 181 900 18% of taxable income 181 901 to 284 100 32 742 + 26% of taxable income above 181 900 284 101 to 393 200 59 314 + 31% of taxable income above 284 100 393 201 to 550 100 93 135 + 36% of taxable income above 393 200 550 101 to 701 300 149 619 + 39% of taxable income above 550 100 701 301 and above 208 587 + 41% of taxable income above 701 300 Trusts other than special trusts Rate of tax 41% This year micro business enjoys the benefit of reduced tax rates for turnover tax. Taxable turnover (R) Rates of tax (R) 0 – 335 000 0% of taxable turnover 335 001 - 500 000 1% of taxable turnover above 335 000 500 001 - 750 000 1 650 + 2% of taxable turnover above 500 000 750 001 and above 6 650 + 3% of taxable turnover above 750 000 VALUE OF PROPERTY RATE R0 – R750 000 0% R750 001 – R1 250 000 3% on the value above R750 000, but not exceeding R1 250 000 R1 250 001 – R1 750 000 R15 000 plus 6% on the value above R1 250 000, but not exceeding R1 750 000 R1 750 001 – R2 250 000 R45 000 plus 8% on the value above R1 750 000, but not exceeding R2 250 000 R2 250 001 and above R85 000 plus 11% on the value above R2 250 000 THE NEWTAX RATES INCREASES BY: Malt beer 7c per 340ml can 15c per 750ml bottle 19c per 750ml bottle Sparkling wine 48c per 750ml bottle Ciders and alcoholic fruit beverages 7c per 330ml bottle Spirits R3.77 per 750ml bottle Cigarettes 82c per packet of 20 Cigarette tobacco 91c per 50g Pipe tobacco 26c per 25g Cigars R3.09 per 23g 2015 BUDGETT A X P R O P O S A L S // Source National Treasury