Finance Minister Tito Mboweni delivered his first, much anticipated 2019 budget speech on Wednesday in Parliament.
Following President Cyril Ramaphosa’s State of the Nation Address (SONA), it was expected that the minister was working with a very tight budget.
Key announcements made by the minister
During his speech, Mboweni assured South Africans that the revenue collection agency is “being fixed.”
Mboweni announced that a new SARS commissioner would be appointed and unveiled in the coming weeks. The minister also announced three other developments on the forecast for the revenue collection service:
- A new Illicit Economy Unit to be launched in April 2019, will fight the trade in illicit cigarettes and tobacco
- SARS is strengthening its IT team and its IT systems and this is crucial for our tax collection efforts
- Information sharing agreements with allies will to help fight cross-border tax evasion schemes
The minister also announced that there would be no increase in personal taxes.
Cut in government expenditure
The Minister followed up on his promise during his mid-term budget speech of reducing government expenditure.
“Since October, government has taken steps to adjust baseline expenditure downwards by a total of R50.3 billion over the medium term.
“Half of these reductions come from adjustments to government’s spending on compensation. R12.8 billion comes from measures to reduce spending on specific programmes,” he explained.
State owned enterprises
Mboweni admitted that SOEs are under serious financial pressure and numerous requests for bailouts have been received.
He pointed Eskom out in specific, adding that injecting money to the power utility in its current infrastructural form would be like “pouring water into a sieve”.
Mboweni added that Treasury will set aside R23-billion a year to help the power utility to get back on its feet, however, only once Eskom has been “unbundled”.
He made it clear that government would not be involved in paying Eskom’s debt of more than R400-billion.
“The national government is not taking on Eskom’s debt. Eskom took on the debt. It must ultimately repay it,” he charged.
The minister also revealed that R13-billion would set aside in the 2019/2020 financial year in addition for any other financial requests from SOEs.
Economic growth and job creation
Mboweni noted the R300-billion worth of pledges made by key stakeholders in the private sector at the inaugural jobs summit.
“We have also increased the income eligibility thresholds for the highly successful employment tax incentive scheme. Jobs for 1.1 million young people are supported by this programme,” he said.
As set out by President Ramaphosa during his SONA speech, education will receive a large government contribution.
- R30-billion to be allocated to building new schools;
- R2.8-billion to be included in the School Infrastructure Backlogs grant to replace pit latrines with toilets; and
- R111.2-billion will be spent on funding 2.8-million students’ tertiary education.
Mboweni declared this year as as a seed of renewal and growth.
“It is all of our duty to tend the seed and see that it grows strong, tall and fruitful,” he said.