'Assault on the poor': S Africa's new budget slammed


Meanwhile, the EFF re-iterates its rejection of the Finance Minister, Malusi Gigaba, and continues to call on President Cyril Ramaphosa to remove Gigaba with immediate effect.

The rand (ZAR) appreciated somewhat and bond yields traded lower soon after the Minister started to speak, signalling firm approval from the markets.

He says all three agencies were of the preliminary view that the country has done well.

"The figures overall were fairly conservative".

The Treasury said the budget deficit was seen narrowing to 3.5 per cent of gross domestic product (GDP) by 2020 from 4.3 per cent in the 2017/18 fiscal year.

Faced with a ZAR48.2 billion hole to fill, Gigaba found some interesting ways to raise the necessary revenue.

But with the Value-Added Tax rate unchanged since 1993 the move was likely to prove unpopular ahead of a national election next year.

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On the other hand, Minister Gigaba announced some relief for the poor and the working class in the form of below inflation increase in personal income tax, while ensuring an above average increase in social grants.

National Treasury will raise nearly R7 billion from the personal income tax system through lower-than-inflation increases to tax rebates and brackets, effectively collecting taxes by stealth.

"Acknowledging that company tax is already at the upper end of the global scale, this was also left unchanged, which is important if government is to stimulate job creation". Broad expectations are that South Africa may have just done enough to buy another 6 months grace from the ratings agency, although it appears unlikely to shrug off the negative outlook.

The community organisation however criticised the slashing of basic education funding, saying "the crises in our schooling system - early grade reading proficiency, infrastructure, safety, and scholar transport - means that attention to spending on basic education, and implementation of programmes should increase annually, especially until historic backlogs are remedied".

In essence, the more South Africans pay for a auto the more tax they will pay. This Treasury projection reflected major revenue shortfalls, weak economic growth and a limited policy response.

That is barely in line with population growth and far short of the 3% expansion for 2018 Mr. Ramaphosa had envisaged when he campaigned to become ANC leader a year ago, and of the 5% growth he had foreseen for the period after 2023.

Although the Minister suggested that the proposed tax changes will in total generate an additional ZAR36 billion in 2018/19, estate duty and donations tax are historically not large contributors to revenue, she observes.