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#Budget2019 in a nutshell

‘I want to make it clear, the national government is not taking on Eskom’s debt.’

Eskom (and other SOEs)

· Government not taking on Eskom’s debt

· Setting aside R23 billion a year to support Eskom during its “reconfiguration”

· Support conditional on appointment of a chief reorganisation officer (CRO)

· Finance minister Tito Mboweni likens reorganisation to “curatorship”

· Mboweni: The president is right when he says Eskom will not be privatised

· Contingency reserves revised upwards to R13 billion for 2019/20 to respond to possible requests for financial support

· Support budget-neutral “as far as possible”

· Cabinet considering proposal to end guarantees for operational purposes

· Mboweni: Summit must be held on where to go with state-owned enterprises (SOEs).

Read: Wanted: Equity partners for Eskom Transmission

Growth and other key figures

· GDP growth for 2019 revised downwards from 1.7% to 1.5% (2020: 1.7%; 2021: 2.1%)

· Tax revenue for 2018/19 to undershoot mini-budget estimate by R15.4 billion, half of this due to higher than expected Vat refunds

· Consolidated budget deficit to widen to 4.2% in 2018/19 from mini-budget estimate of 4% (2019/20: -4.5%; 2020/21: -4%)

· Gross debt to GDP ratio to stabilise at 60.2% in 2023/24, higher than mini-budget projection of 59.6%

· In 2019/20 government will spend R243 billion more than it earns (revenue of R1.58 trillion and spending of R1.83 trillion)

· SA is borrowing R1.2 billion each weekday

· Interest expenditure is R1 billion per day.

Read: The bottom line and what we are going to do about it 

Tax announcements

· No change to personal income tax rates or brackets but slight adjustment to rebates (revenue of R12.8 billion to be raised this way; collection by stealth)

· No inflationary adjustment to medical tax credit

· No changes to tax rates for corporate income tax or Vat

· Employment tax incentive of up to R1 000 can be claimed for employees earning up to R4 500  pm (previously R4 000)

· Sugar tax increase from 2.1 cents per gram to 2.21 cents per gram

· Carbon tax of 9c per litre on petrol and 10c per litre on diesel effective June 5

· General fuel levy increase by 15c per litre

· Road Accident Fund levy increase by 5c per litre

· Plans to tax electronic cigarettes and tobacco heating products

· Excise duty on cigarettes to rise by R1.14 to R16.66, and 12 cents to R1.74 per can of beer

· New Sars commissioner to be appointed “in the coming weeks”

· Judge Dennis Davis to assess tax gap (difference between tax due and tax collected)

· Review of explosion of duty-free shops in SA planned

· Introduction of export tax on scrap metal to be explored.

Read: Funds for NHI to be redirected to improving health services 

Read: Commuter costs set to rise as fuel taxes accelerate 

Expenditure

· Baseline expenditure adjusted downwards by R50.3 billion since mini-budget

· Half of the reduction comes from adjustments to spending on compensation

· Older public servants may retire early and gracefully, leading to savings of R4.8 billion in 2019/20; R7.5 billion in 2020/21 and R8 billion in 2021/22

· Limits on overtime, bonus payments and pay progression planned

· Staffing of diplomatic missions considered “unjustified”, to be reviewed

· No salary increases for members of parliament and provincial legislatures or executives at public entities

· Provisional allocations for financial support to Eskom and Infrastructure Fund offsets baseline reduction

· Expenditure ceiling revised upwards by R16 billion over three years

· Allocation to Jobs Fund to rise to R1.1 billion over three years

· Old age grant rises R80, foster care up R40 to R1 000, and child support grant to R420 in April and R430 in October

· Help-to-buy subsidy to help first-time home buyers purchase a home; R950 million for pilot phase over three years.

Read: #Budget2019: This is what you’ll pay

Infrastructure Fund

· Central pillar of budget and reprioritisation

· Will accelerate R526 billion of on-budget projects by bringing in the private sector and development finance institutions

· In several cases, the private sector will design, build and operate key infrastructure assets

· Government to commit R100 billion over next decade.

Read: Tito Mboweni’s complete budget speech 

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COMMENTS   31

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…as predicted yesterday, Personal Income Tax to remain “unchanged”…but in fact it “increases through stealth”.

Inflation is SARS’ friend.

Hence to nullify this year’s Individual tax ‘increase’, all you need to do is to ‘negotiate’ with your current employer (or pension fund) to have your salary kept at 2018 levels…

Yes, and starve for the last 36 hours of each month

Exactly! It means that, given enough time for inflation over the next few years….when a loaf of bread cost say R100, and the gardener earns R2500 per day…such a person will be well in excess of the R77K tax-threshold for individuals 😉

The beggar on the street corner will soon fall into the lowest tax bracket.

Yes and you’ll pay R12.75 less tax each month!

Awesome…so my company hasn’t given increases in past 3 years….does that mean I’m wealthier? LOL

I wouldve liked to have seen more definitive plans set out how Eskom is going to collect money from non-payers. That is a material factor in determining whether or not Eskom can turn around. I’m not sure saying the words ‘Thuma Mina” is all of the sudden going to encourage people to pay their electricity bills. I guess we’ll have to see what they do once split up.

I would say the roll-out of PRE-PAID meters is the ONLY option for SA residents going forward (and with enforcing/inspections on illegal connections…if that is possible).

Factories/industry? Hmmm…I can see the boss or CEO leading the meter every morning 😉

Prepaid meters is a good solution. I bet that if all residential users had meters in their homes, Eskom would be able to charge a much lower rate and still have a better cash flow. A cheaper rate could also jump start the economy as people will have more money to spend. There would probably also be the benefit of people using less electricity because they’re more conscious that they don’t want to use up their prepaid for the month, thus better for the environment

Marketplace – Hugh Masekela
…We had a night time of ecstasy
And we woke up to the roar of the lion
She had to rise to the market place
To her vegetable stall at the market place
That’s where the sun rises.

Thuma Mina teaches the disadvantaged to sit on their butts and wait to be rescued.
Marketplace teaches folks to get off their butts and get busy. Wrong song, Cyril.

aww shucks Tito, you shouldn’t have, seriously, you shouldn’t have. this is a lame duck, pre-election budget that just moves a few chess pieces around so that he didn’t stand there sucking his thumb. Eskom is that huge lumbering beast that didn’t happen overnight, but is now so huge no one can ignore it. after the [it wasn’t sabotage] load shedding exercise it’s clear that the folks at Eskom hold the reins. deep breath in, deep breath out – repeat until after the elections – when things will…….

Say what?! “SA is borrowing R1.2 billion each weekday. Interest expenditure is R1 billion per day.”
What a legacy to leave our grand children… Every passing day means another approx R2B they must somehow repay – debt they had nothing to do with.

There won’t be any grandchildren burduned with SA’ future debt. These kids would be long gone taken up work abroad, when us current generation will be in our graves. At the rate youngsters are leaving SA, comes as no surprize.

Those “faithful & hopeful” that will remain in SA in the next generation, will be “using the bush” as ‘Sensei’ commented in another post.

Remember Mr Dickens?

Mr Micawber’s famous, and oft-quoted, recipe for happiness or misery:

“Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

If we are borrowing R1.2 Billion each weekday then the answer has been right before us all this time. Just make the weekend longer, thereby reducing the number of weekdays and by default reducing the amount we borrow.

This is like tittering over the menu on the last day of the Titanic, stupid and pointless. This hospice bed-ridden country is paying R 1 BILLION A DAY in interest charges! Borrowing R 1.2 BILLION per work day. Do the math – paying R 7 bill. a week in interest and borrowing R 6 bill. a week, so we are falling behind in cash flow by R 1 billion a week and that is only to SERVICE the national debt. No people, this thing is in a death spiral… I used to be an optimist, I really did but I’m done. SA is finished. Sorry. Bless my mum and her UK birth and the little maroon book that has given me

You will only find a temporary reprieve in the UK. The bourgeois socialist rot has settled itself among my millennial peers – not to mention the new ‘Europeans’ who have a distaste for liberal values while on the dole. If our almost 60% Debt:GDP ratio is giving you pause, the OFFICIAL Uk debt is 2.1 Trillion GBP and almost 4.8 Trillion if you include the pensions. Then there is the money-pit that is the chronically underfunded NHS.

Some of your millennial peers in the UK are doing quite well. My two daughters in the UK are not even interested in visiting this Banana Republic. Regarding the NHS, it is far superior to the public healthcare system SA.

If we are burning )18bn a year, we are going to hit 60% by 2020 – by my rough calculation. God help us if we have a public sector strike (anyone want to bet against this happening now that they aren’t getting an increase?) or worse, above target inflation forcing rate hikes or anything unbudgeted – like water and sanitation collapse requiring bailout. This is real knife edge stuff. I suppose we aren’t at Greek levels of debt yet, but then we don’t have the luxury of -be interest rates or an ECB that can bail us out for virtually nothing

Our DEBT:GDP will ‘stabilise’ at about 60%

Ceteris Paribus

Assuming 2% gdp growth remember

Concerns about debt? Not at all.

The name of the game is the runaway rand. A very easy task to engineer in South Africa. Money printing? Scare tactics, Emerging market crisis all options.

Once you have a devaluing currency, VAT, exporters earnings etc all go up. Use that tax revenue or printed money to pay off that accumulated SA denominated debt.

Only downside is your people have to live with inflation… but at least you pay off the debt.

Geeks note – only works well if you’re not too energy or import dependent.

As soon as I saw Tito speaking from behind a potted Aloe Ferox I thought: “Hier kom KAKTUS” – I was not disappointed.

ja, once again the middle class is being forced to pay for this government’s gross incompetence and corruption. Good news for everyone except the middle class. South African’s GDP has flat-lined since 2009 versus the rest of the globe’s steady increase; we are rapidly becoming poorer and increasing tax by stealth is not going to change that, hence reducing poverty cannot be done.

How about giving the MC a break for ONCE? Ever struck anyone that 4 million taxpayers cannot continue indefinitely sustaining a socialist welfare state of 55 million? That a tax BREAK might be what’s lacking in stimulating economic growth? Anyone look at Singapore’s income tax rates, and how wealthy that country is, despite its poverty in natural resources? The MC is voting with its feet and walking away from the country – we shall be a country of old men and women (MC) soon, since anyone under 50 is sensibly taking their acumen and attempts to build wealth elsewhere.

Over and above all the comments made, I’m also concerned about the long term effects of the current road we are travelling on pensioners. Ask any Transnet Pensioner what inflation does to your pension and you’ll understand. Remember the social grant recipients are also “pensioners” as they get money without being economically active. While back at the ranch, the ANC cadres moved all their ill-gotten wealth to more stable shores and their children can basically walk into a new life while maintaining the same living standards thay are accustomed to. Our kids move off-shore and they have to operate as secondhand citizens in countries that only take them in to perform jobs their own people either can’t or won’t. We need to accept that we live in a society where the vote of the taxpaying citizenry is totally inconsequential.

Same old slippery slope!
Get rid of “older public servants” i.e. those with years of experience, appropriate qualifications and know-how, and keep those highly paid people not pulling their weight. (They might however vote for you.)
Then, like Pravin said about Escom’s big projects, we can later say we lost!? the expertise to manage the projects.

From 1920 to 2008 Eskom didn’t need any national budget. Zero. It wrote its own bonds. Now under the ANC it needs R23bn a year just to keep the lights on.

The ANC uis killing SA”s economy.

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