In his speech, Gordhan said that the government has a “clear and comprehensive vision for South Africa in 2030, a plan for higher growth, decent work and greater equality”. The first phase of fulfilling this vision, he continued, is a five-year plan and a medium term budget framework.
This budget framework is set against an expected 2.7% growth in the South African economy, which is growing more slowly than was predicted last year because of the unsteady global economic outlook. Investment, which Gordhan hopes his budget will promote, is set to rise by 5% over the next year. Gordhan warned that domestic risks – such as delays to the introduction of new infrastructure, a weak Rand, and labour disputes – may hamper this.
It is easy to get lost in the long words and big numbers, so here is what students should know about the budget:
Education may be easier to access
Gordhan said that government has made great strides in improving access to education. R115 billion was spent on higher education alone over the last five years, and Gordhan has allocated billions more to improve education.
The National Student Financial Aid Scheme (NSFAS)’s funding from the government will amount to R19.4 billion over the next three years. This will support approximately 500 000 students a year. Over the last five years, R18.6 billion was spent on NSFAS. Last year, R5.1 billion was allocated to NSFAS. This will rise to R6.6 billion for the fiscal year 2016.
Spending on social infrastructure, which includes education facilities, has increased from R30 billion to R43 billion. Gordhan also said that 433 schools will be rebuilt.
It may be easier to find a job
Although 1.3 million people have found jobs since the 2009 economic depression, Gordhan says that South Africa’s unemployment figures (24% of the workforce) are too high.
To address this, Gordhan said that government will provide funding for the creation of six million jobs over the next five years. During the last five years, government spent R100 billion to create four million jobs.
This year’s budget aims to boost youth employment and Gordhan set out several strategies that have been adopted to achieve this. Government will step up the implementation of the Expanded Public Works Programme (which provides short- to medium-term jobs) and implement a new Community Works Programme (part of the public works programme) in every municipality by 2017.
Government will also aim to increase youth employment through the youth employment tax incentive, also know as the youth wage subsidy, which encourages companies to employ people between the ages of 18 and 29.
Other strategies for increasing youth employment are establishing special economic zones, industrial incentives and support for agriculture and labour-intensive sectors; improving skills development and further education and training; and providing housing investment opportunities, support for small and medium enterprises, and Jobs Fund partnerships with private and public sector development agencies.
Gordhan said that “billions of rand” has been allocated to youth development and employment.
Saving money for later may become easier
Legislation to allow tax-exempt savings account is before parliament. According to Gordhan, this will increase household saving.
Proposed retirement reforms aim to make it easier for South Africans to save for their old age. Parliament has passed legislation to improve the governance of pension and provident funds, and Gordhan wants to improve the collection management of retirement funds. He also wants to move towards a mandatory system of retirement.
Healthcare may become more affordable
The budget provides for a National Health Insurance (NHI) scheme. The NHI, which Gordhan describes as “a far-reaching reform to make quality healthcare available to all South Africans”, will be tabled in parliament soon. Gordhan says that the success of the NHI depends on improvements to public sector health delivery and reductions in the cost of private healthcare. R1.2 billion has been allocated for NHI pilot projects.
More support will be offered to small business owners and entrepreneurs
Gordhan promised increased support to small business owners and entrepreneurs and promised R6.5 billion over the next three years to assist owners of small to medium enterprises.
The budget aims to ease the tax burden of these enterprises.
Organisations involved in small enterprise development through grants will be granted tax relief. Grants given to small and medium enterprises will be tax exempt, regardless of where they come from.
Paying taxes may not be such a headache…
The South African Revenue Service (Sars) has begun the process of reducing the cost of tax compliance. Sars will also implement a single registration system of taxpayers and traders for main taxes.
Gordhan predicted R9.3 billion in income tax relief for households.
… but partying is going to become more expensive
Excise (a tax on the sale of specific items) on alcohol and cigarettes is likely to increase by 6.2-12%.
Beer (excluding traditionally brewed beers) will increase by nine cents per 350ml can.
Unfortified wine will increase by 13 cents per 750ml bottle and fortified wine by 27 cents per 750ml bottle. Sparkling wine will increase by 62 cents per 750ml bottle. Ciders and coolers will increase by nine cents per 330ml bottle and whiskey will go up by R4.76 per 750ml bottle. Cigarettes will increase by 68 cents per pack of 20 cigarettes, while luxury cigars will increase by R5.11 per 23g.
Driving around will also become more expensive. While the general fuel levy increase has been limited to 12 cents per litre, the Road Accident Fund levy will increase by eight cents per litre.
Image: mg.co.za
