News 28 February 2014
News 28 February 2014
RELEVANT POINTS OF INTEREST IN THE 2014 BUDGET
The presentation of the Finance Ministers 2014 budget on Wednesday did not produce too many shocks possibly because of the forth coming elections.
As far as the average ‘man in the street’ is concerned it is good to note that the Minister of Finance announced that his latest budget will be giving back R9.25bn to a large sector of the tax paying public.
BUDGET FRAMEWORK:
- Budget deficit of four percent of GDP expected for 2013/14, narrowing to 2.8 percent in 2016/17;
- Debt stock as percentage of GDP to stabilise at 44.3 percent in 2016/17;
- Tax revenue for 2013/14 expected to be R1 billion higher than projected in 2013 budget;
- Real growth in non-interest spending to average 1.9 percent over next three years;
- National and provincial government expenditure on travel, catering, consultants and other administrative payments declines as a share of spending;
- Expenditure ceiling commits government to spending limits of R1.03trn in 2014/15, R1.11trn in 2015/16 and R1.18trn in 2016/17.
Highlights of the National Budget Speech 2014 have been extracted that are of interest to SA’s middle-class families;
- R34,3bn on school infrastructure
- R148.8bn to support municipal infrastructure
- Health gets R145bn
- R78bn on university subsidies and R19.4bn for the National Student Financial Aid scheme
Of further interest;
- Measures to encourage small enterprise development;
- Clarity on valuation of company cars for fringe-benefit tax purposes;
- Reforms to tax treatment of the risk business of long-term insurers;
HOUSEHOLD DEBT CONCERNING:
The level of over-indebtedness of households is concerning, Finance Minister Pravin Gordhan said on Wednesday.
Tabling his 2014/15 budget in the National Assembly, he said government recognised the need to protect and improve the financial well-being of households, to make them less vulnerable to a sudden loss of income in bad times.
"We recognise that households must be encouraged to invest in their future, including investment in homes or productive assets, and saving for retirement or business purposes," he said.
South Africa had made good progress towards achieving the National Development Plan's goal of 90 percent access to financial services by 2030.
Some 79 percent of adult South Africans were using regulated financial services in 2013.
Many more households had access to affordable credit, which was of great benefit when used productively, but bad when used to fund excessive consumption.
"Government is concerned about the level of over-indebtedness of households," Gordhan said.
Cabinet had therefore approved a number of measures to assist such households reduce their debt burden, and to stamp out abusive and fraudulent activities of reckless lenders and unscrupulous debt collectors.
"Working jointly with the ministers of trade and industry and justice, we will shortly commence actions against abusive and unsustainable practices."
With regard to retirement, Gordhan said there would be further reforms over the period ahead.
Legislation had already been passed by Parliament to improve governance over pension and provident funds, and to align the rules and tax treatment of pension and provident funds, while at the same time protecting vested rights.
"We still seek improved coverage and preservation of retirement funds, and lower costs in the system.
Government was consulting, within the[National Economic Development and Labour Council, on measures to cover the six million employed South Africans who did not enjoy access to an employer-sponsored retirement plan.
"We intend to move progressively towards a mandatory system of retirement for all employed workers."
Agreement had been reached with the Association of Savings and Investment of SA on a way forward to reduce the level of charges for retirement savings products. Draft regulatory reforms would be published shortly, Gordhan said.
ELIMINATE WASTEFUL SPENDING, CORRUPTION:
Eliminating wasteful spending and corruption is a focus of the 2014 Budget, Finance Minister Pravin Gordhan said on Wednesday.
Tabling the budget in the National Assembly, he said it was one in which circumstances dictated that "we cannot add resources to the overall spending envelope".
"The emphasis falls therefore on ensuring that expenditure is allocated efficiently, enhancing management, cutting waste and eliminating corruption," he said.
A series of initiatives were focused on these concerns, including spending reviews to examine programme performance and value-for-money. These were being conducted by the National Treasury and performance monitoring and evaluation department, and by provincial treasuries.
03 Apr 2014
Author Dormehl