Thursday, February 22, 2007

Summary of Budget Speech

1.Net tax relief of R12,4bn.    Tax relief for individuals totals R8,4bn.

2. Secondary tax on companies to be replaced by a dividend tax at a shareholder level. The rate of which changes from 12,5% to 10%.

3. Retirement tax is abolished, last year it was halved from 18% to 9%.

4.The withholding tax on lump sum pension and provident fund payments is reduced to zero for those
earning below R43 000 annually.

4. A basic, compulsory, earnings-related social security system is proposed, for implementation by 2010. Related to this is a wage subsidy for those whose income falls below taxable levels.

4.An additional R13,3bn for the 2010 FIFA World Cup, bringing the total contribution from national
government to R17,4bn – R8,4bn for stadiums and R9bn for transport infrastructure.
 
5. Provinces receive an extra R24,6bn to improve the quality and access to health, school education, welfare services and for economic services.

6. Local governments get an additional R5bn to the local government equitable share provides further support to municipalities for the delivery of free basic services.
 
7. Education gets a R4,6bn boost while housing and community development gets R11,6bn more.

8. R2,4bn for industrial development, science and technology.

9. The fight against crime receives R6,8bn more, while R4,7bn for international relations and defence.

10. R3,7bn for the comprehensive HIV and Aids programme, and the revitalisation and modernisation of hospitals and health facilities.

11. GDP is expected to grow at about 5,1% over the forecast period after posting a figure of 4,9% in 2006.

12. CPIX inflation averaging 4,7% over the Medium Term Expenditure Framework period.

13. A main budget surplus of 0,3% in 2006/07 and 0,6% in 2007/08, moving to deficits of
0,1 per cent in 2008/09 and 0,4 per cent in 2009/10.

14. National budget revenue increases to R475,8bn in 2006/07, R9,4bn more than expected.

15 State debt service costs as a percentage of GDP fall from 3% in 2006/07 to 2,1% in
2009/10.

16. Further exchange control relaxations are introduced for offshore investment and customer foreign currency accounts for companies as well as currency futures.