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2020 Budget Speech Highlights: Minister Mboweni announces no major new taxes

26 February 2020 3:07 PM
Tags:
Tito Mboweni
2020 Budget Speech
Economic “jump starts”, electricity, no major new taxes… Here are the highlights of Minister Tito Mboweni’s 2020 Budget Speech.

(Click here to read the speech in its entirety.)

Minister Tito Mboweni yet again pulled out the Aloe Ferox this year.

“It thrives when times are tough,” he said.

He supposedly he gave it too much water last year.

Finance Minister Tito Mboweni in Parliament for his Budget speech on 26 February 2020. Picture: GCIS.

Mboweni spoke about several “jump starts” our stalling economy would get over the next 18 months:

  • The fruits of the reform agenda led by President Cyril Ramaphosa

  • Lower inflation

  • The interest rate reduction from earlier this year

  • The recent gains in platinum group metals prices

  • The impending change to the electricity regulatory framework

  • The tax proposals set out in the 2020 Budget Speech

Despite the jump starts, he says growth will average just over 1% in the next three years due to the persistent electricity supply shortage.

Therefore, a stable supply of electricity will be our number one task.

Tito Mboweni, Minister of Finance

Budget outline:

  • Projected revenue: R1.58 trillion

  • Projected expenditure: R1.95 trillion

  • Budget deficit: R370.5 billion

  • Gross national debt: R3.56 trillion (65.6% of GDP)

No major new taxes

Despite expectations of an increase in VAT, it never came.

Mboweni even announced modest personal income tax relief.

Someone earning R10 000 a month will pay 10 per cent less in tax. Someone earning R100 000 a month will pay about 1.5 per cent less.

Tito Mboweni, Minister of Finance

Mboweni proposed a broader corporate income tax base with additional revenue used to reduce the corporate tax rate.

He raised the threshold for property transfer duties to R1 million.

"Sin" taxes:

  • 340ml can of beer or cider to cost an extra 8c

  • 750ml bottle of wine will cost an extra 14c

  • 750ml bottle of sparkling wine an extra 61c

  • Bottle of 750 ml spirits, including whisky, gin or vodka, will rise by R2.89

  • Packet of 20 cigarettes will be an extra 74c

  • 25 gram of piped tobacco will cost 40c more

  • 23 gram cigar will cost an extra R6.73

The fuel levy goes up by 25 cents per litre.

Our Aloe Ferox can withstand the long dry season because it is unsentimental. It sheds dead weight, to direct increasingly scarce resources to what is young and vital.

Tito Mboweni, Minister of Finance

Minister Mboweni announced a downward adjustment to non-interest expenditure of R156.1 billion over the next three years relative to the 2019 Budget projections.

The Minister aims to save R37.8 billion in the next financial year on the Government’s wage bill.

Organised labour understands where we are. They have made constructive proposals on a range of issues.

Tito Mboweni, Minister of Finance

Social grants

  • R80 increase for the old age, disability and care dependency grants

  • R80 increase in the war veterans grant

  • R40 increase for the foster care grant

  • R20 increase in the child support grant

Electricity – “our number one task”

The government will do whatever it takes to ensure stable electricity supply. We have allocated R230 billion over ten years to achieve the restructuring of the electricity sector.

Tito Mboweni, Minister of Finance

SAA

Government has allocated R16.4 billion to settle the airline’s guaranteed debt and interest.

The SAA Sword of Damocles has now fallen on us.

Tito Mboweni, Minister of Finance

Justice

The National Prosecuting Authority, the Special Investigating Unit and Directorate for Priority Crime Investigation get an extra R2.4 billion.

This will enable the appointment of approximately 800 investigators and 277 prosecutors who will assist with, among other things, clearing the backlog of cases such as those emanating from the Zondo commission.

Tito Mboweni, Minister of Finance

State Bank and Sovereign Wealth Fund

The Minister gave few details but announced that the “preferred options for the establishment of a bank” are ready.

The state bank will function as a retail bank and will operate on commercial principles.

Mboweni announced the formation of the “South African Sovereign Wealth Fund”.

Mboweni’s conclusion

Winning is not easy. Less than two years before winning the World Cup, the Springboks lost 57-nil to the All Blacks. Miss Universe did not win her first attempt at Miss South Africa. Winning takes patience, prudence and perseverance. As Saint Paul tells us we must run in such a way that we may win.

Tito Mboweni, Minister of Finance

(Click here to read the speech in its entirety.)

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26 February 2020 3:07 PM
Tags:
Tito Mboweni
2020 Budget Speech

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