Issue 211 | 25 February 2016
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The 2016 Budget affirms government’s commitment to close the gap between spending and revenue and implement a plan for stronger economic growth.


The Minister of Finance, Pravin Ghordan, tabled his Budget in Parliament on Wednesday, 24 February. Highlights included:

Budget framework
  • The budget deficit will fall from 3,2% in 2016/17 to 2,8% in 2017/18 and 2,4% the following year.
  • Debt stock as percentage of gross domestic product (GDP) will stabilise at 46,2% in 2017/18.
  • Government will lower the expenditure ceiling by R10 billion in 2017/18 and R15 billion in 2018/19 by reducing public-sector compensation budgets.
  • An additional R18,1 billion of tax revenue will be raised in 2016/17, with an additional R15 billion in each of the subsequent two years.
  • Government has responded to new spending needs without compromising expenditure limits. An amount of R31,8 billion 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, government will spend:
  • R457.5 billion on social grants
  • R93.1 billion on transfers to universities, while the National Student Financial Aid Scheme receives R41.2 billion
  • R707.4 billion on basic education, including R45.9 billion for subsidies to schools, R38.3 billion for infrastructure and R14.9 billion for learner and teacher support materials
  • R108.3 billion for public housing
  • R102 billion on water resources and bulk infrastructure
  • R171.3 billion on transfers of the local government equitable share to support the expansion of access of poor households to free basic services
  • R30.3 billion to strengthen and improve the national non-toll road network
  • R13.5 billion to Metrorail and Shosholoza Meyl to subsidise passenger trips and long-distance passengers
  • R10.2 billion for manufacturing development incentives
  • R4.5 billion for National Health Insurance pilot districts.

Tax proposals

  • An amount of R9.5 billion will be raised through increases in excise duties, the general fuel levy and environmental taxes.
  • Limited fiscal drag relief of R5.5 billion will be implemented for individuals, focusing on lower- and middle-income earners.
  • Adjustments to capital gains tax and transfer duty raise R2 billion.
  • Government proposes to introduce a sugar tax on 1 April 2017 to help reduce excessive sugar intake.
  • A tyre levy will be implemented, effective 1 October 2016.
  • The general fuel levy will increase by 30c per litre on 6 April 2016. This will push up the general fuel levy to R2.85 per litre of petrol and to R2.70 per litre of diesel.
  • Excise duties on alcoholic beverages (particularly beer, ciders, fruit beverages and spirits) will increase by between 6,7 and 8,5%. The increases in excise duties are as follows:

    • malt beer, 11c per 340ml can
    • unfortified wine, 18c per 750ml bottle
    • fortified wine, 27c per 750ml bottle
    • sparkling wine, 59c per 750ml bottle
    • ciders and alcoholic fruit beverages, 11c per 340ml bottle
    • spirits, R3.94 per 750ml bottle
    • cigarettes, 82c per packet of 20
    • cigarette tobacco, 94c per 50g
    • pipe tobacco, 27c per 25g
    • cigars, R4.32 per 23g.
Macro-economic outlook
  • GDP growth is estimated at 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 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 R1 525.
  • Disability Grant from R1 415 to R1 505.
  • Foster Care Grant from R860 to R890.
  • Care Dependency Grant from R1 415 to R1 505.
  • Child Support Grant from R330 to R350.
– Source: National Treasury,
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