Carrot-and-stick budget from Gordhan

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By Political Bureau

Cape Town - Finance Minister Pravin Gordhan held out hope - including tax relief for hard pressed consumers and an expanded social wage for the poor - but also promised to crack the whip on tax evaders and those enriching themselves through the government’s tender system.

With a resounding “yes, we can”, Gordhan said in his 2013 Budget that South Africa could be a “winning nation”, but it would require everyone to put shoulder to the wheel.

“Hope and confidence come from energetic involvement and a willingness to make a direct contribution to change. The imperatives of change are not just challenges to government, they confront all of society,” Gordhan told a joint sitting of Parliament.

The National Development Plan, which proposes concrete actions to eradicate inequality and reduce poverty by 2030, was put at the centre of the country’s fiscal plan and development.

“Measured year by year, district by district, there will be advances and there will be setbacks,” said the finance minister.

“But in each five-year term of government we must demonstrate as we have since 1994 that we can meet more demanding milestones - more jobs, more enterprises, more technological innovation, better housing, progress in education and health.”

Gordhan’s room to manoeuvre has been limited by lower than predicted tax income, but savings of R10.4 billion have been found in each government department through cuts and reprioritisation. The government’s mega infrastructure delivery programme of R827bn over the next three years will not be affected.

Gordhan has R1.15-trillion to disburse.

* Education will receive the lion’s share, R232.5-billion, of which most will go to basic education (R164bn), while R6.5bn has been set aside for two new universities in the Northern Cape and Mpumalanga;

* Social grants increase: pensioners will get R1 260 per month, or R60 more, but the means test will be phased out by 2016, while child support grants will increase first to R290 and in October to R300 and the foster care grant increases by R30 to R800 a month;

* Tax relief of R7bn will put extra money in South Africans’ pockets;

* While a review of the tax regime is under way, some initiatives estimated at R350-million kick in immediately, including tax relief for those receiving housing subsidies where the employer transfers a house at less than market value to low-income earners and further rebates on medical aid contributions.

Gordhan was concerned over a lacklustre trade performance: exports grew only 1.1 percent, while imports increased 7.2 percent. This meant expenditure exceeded the value of production and income by around R190bn.

However, he was confident about South Africa’s outlook, saying economic growth, while slow, would continue to rise.

“But this is not enough. Much more is needed. In particular, a significant increase in private sector investment and competitiveness is needed in the wider economy: agriculture, manufacturing, tourism, communications - every sector has to play its part in expanding trade, investment and job creation,” Gordhan said.

The government is continuing to do its bit, much of it focused on improving access to basic services and water.

Gordhan said the government would tackle its weaknesses, including professionalising the public service, improving systems to fight corruption and planning better.

Download a copy of the Budget 2013 speech here. 

 

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