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South African Minister of Finance Tito Mboweni delivers his 2019 Budget Speech in the South African Parliament, on February 20, 2019, in Cape Town. RODGER BOSCH / AFP

The 2019 Budget Speech In A Nutshell

 

Budget speech 2019: Key announcements 

 

Tax increases and developments at SARS

Revenue forecast for this year has been reduced by R15.4-billion and, according to the minister, this is due to the increase in value-added tax (VAT) refunds.

Mboweni also noted that a new SARS commissioner would be appointed and unveiled in the coming weeks. These are three other major developments he revealed:

  • A new Illicit Economy Unit to be launched in April 2019, will fight the trade in illicit cigarettes and tobacco;
  • SARS is strengthening its IT team and its IT systems and this is crucial for our tax collection efforts; and
  • information sharing agreements with allies will help fight cross-border tax evasion schemes.

Mboweni, too much of the relief of many, announced that there would be no increase in personal taxes.

Reduction in government expenditure

The Finance Minister assured to keep the promises made in his mid-term budget speech of reducing, where possible, government expenditure.

“Since October, government has taken steps to adjust baseline expenditure downwards by a total of R50.3 billion over the medium term.

“Half of these reductions come from adjustments to government’s spending on compensation. R12.8 billion comes from measures to reduce spending on specific programmes,” he explained.

Exceptions, where necessary, would be made for Eskom and the Infrastructure Fund. The expenditure ceiling on government programmes, for the next three years, has thus been revised to R16-billion.

Restructuring of state-owned enterprises

This is where Mboweni played a firm approach was taken. He admitted that many of our SOEs (State Owned Companies) are financially strained and have made requests for bailouts.

With regards to Eskom, he noted that pumping money to the power utility in its current infrastructural form would be like “pouring water into a sieve”.

He stated that the national government would not participate in paying Eskom’s debt of more than R400-billion.

“The national government is not taking on Eskom’s debt. Eskom took on the debt. It must ultimately repay it,” he charged.

With regards to the assistance of other SOEs, Mboweni revealed that there would be R13-billion set aside in the 2019/2020 financial year for any financial requests.

This puts the South African Airways (SAA) at an awkward place, after their submission of a R21-billion bailout.

Consolidated fiscal framework

The Finance Minister also touched on the much-anticipated fiscal framework.

Read – Budget Speech 2019: Bad news for smokers and drinkers as sin tax rises

Also stating that in 2019/2020, the government expects to spend R1.83-trillion while anticipating revenues of R1.58-trillion.

“That means we will spend R243-billion more than we earn. Put another way, we are borrowing about R1.2-billion a day, assuming that we don’t borrow money on the weekend,” he added.

Also stating that there will be no salary increases for members of Parliament as well as executives in the provincial legislature.

Economic growth and job creation

Mboweni glanced into the private sector to promote inclusiveness in the job market.

Also noting R300-billion worth of pledges made by key stakeholders in the private sector at the inaugural jobs summit.

“We have also increased the income eligibility thresholds for the highly successful employment tax incentive scheme. Jobs for 1.1 million young people are supported by this programme,” he said.

Development in the education system

  • R30-billion to be allocated to building new schools;
  • R2.8-billion to be included in the School Infrastructure Backlogs grant to replace pit latrines with toilets; and
  • R111.2-billion will be spent on funding 2.8-million students’ tertiary education.

Mboweni described this year’s budget as a seed of renewal and growth.

“It is all of our duty to tend the seed and see that it grows strong, tall and fruitful,” he said.