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Treasury finds R36.2bn but SA’s fiscal situation remains serious

Taxpayers must be up to date with compliance before asking for assistance.
Quid pro quo? Finance Minister Tito Mboweni made some interesting suggestions, such as whether there should be a ‘work for a grant’ process. Image: Dwayne Senior, Bloomberg

At the National Treasury press briefing on the economic support package required to deal with the negative economic impact of the “recent disturbances”, Finance Minister Tito Mboweni gave assurance that the fiscal path announced in the 2021 February budget will be maintained.

Mboweni warned that South Africa’s fiscal situation remains serious. The debt burden has surpassed 80% of GDP and it takes R1 out of every R5 raised in taxes to pay the cost of the debt. “The relief package has been “carefully financed to avoid further damage to the public finances”.

National Treasury has been able to cover the massive R36.2 billion relief package due to strong revenue takings in the first quarter, and by reprioritising other support measures. This is on top of the existing pressures on the fiscus, such as the public sector wage bill and the cost of the Covid-19 vaccination programme.

Finer details will be announced at the time of the Medium-Term Budget Policy Statement (MTBPS), due in October.

Due to the significant negative impact of the pandemic and accompanying lockdowns, National Treasury projects that the South African economy will only return to pre-Covid levels (that is, the level in the last quarter of 2019) in 2023.

Mboweni made some interesting suggestions:

  • That “we must relook at [state-owned insurer] Sasria”, and reimagine or repurpose it. “This is an ideal opportunity to do this”.
  • The issue of grants should be debated. Should there be a quid pro quo process, in other words, “work for a grant”? Mboweni in his statement said: ‘’Much work is still being done in this area, and additional borrowings to fund a consumption grant are not supported.”

Read:
Sasria gives mandate to insurers to settle smaller claims immediately
‘Covid grant should be R585, so all people in SA can afford to eat’

Communities must take responsibility

Mboweni said that at the end of the day, it is up to the communities to take responsibility: they know who the looters are.

In reply to Moneyweb’s question on how communities can take responsibility, Mboweni said that government does not support vigilantism, but the communities know who the thugs are, and the violent ones. “The community must ensure that there is order” by reinvigorating street committees and working with police stations, schools and sporting associations.

“We can take peaceful means to stabilise our communities.”

Mboweni also suggested that the relationship between the municipalities and the communities should be looked at, for example, what they can do about cleaning up the community and paving the roads.

Read: The revolt of the ratepayers

Tough love

Sars Commissioner Edward Kieswetter said the good revenue take for the first quarter of the year “augurs well for us”. But he warned that taxpayers must be up to date with compliance before they ask for assistance.

Mboweni added that “it is difficult for us to support businesses who were not good corporate citizens”.

Fiscal relief package

National Treasury Director-General Dondo Mogajane gave assurance that the fiscal relief package of R36 198 million could be funded from revenue and the reprioritisation of measures, and that it will not be necessary to increase borrowings.

Breakdown of the fiscal relief package (Rm)

Fiscal response measures 33 850
– Social relief of distress grants (SRD) 26 700
– Sasria “may be revised as events unfold” 3 900
– Support for businesses not covered by Sasria 2 300
– Additional funds for defence (SANDF) 700
– Additional funds for police (SAPS) 250
Proposed baseline reductions -2 652
– Reprioritisation -1 652
– Reprioritisation from dtic and Small Business -1 000
Increase in spending ceiling 31 198
Revenue measures – employment tax incentive (Ters) 5 000
Financed through additional revenue collection 36 198

Budget process

The proposed spending measures will be implemented according to the budget process:

  • The contingency reserve funds under the 2021 Appropriation Act will be released.
  • The R350 social relief of distress grant has been temporarily reintroduced per the Public Finance Management Act (PFMA).
  • The tabling of a Special Appropriation Bill in parliament for the remainder of the package which is not covered by the legal limits of Section 16 of the PFMA.
  • Further details will be published in the Taxation Laws Amendment Bill and the Tax Administration Laws Amendment Bill.

Mboweni concluded the briefing by saying: “Our country continues to sail through stormy seas and we are patently aware of the difficulties faced by many South Africans.

“We will persevere to keep the ship on course and to support those in dire need.”

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‘Recent disturbances’? This Minister have a way with words. Putting things mildly.

Grants for looters ?
What a strange lot running this country….

Tito and his merry men practice FREAKANOMICS.

If you read Judith February’s tweet, she mentioned that Academics at UCT supported that the STATE gives a grant…. U would think there are clever people advising the STATE…

…. Researchers consult to the STATE … if they dont support STATE policies they lose their consulting business…..

@DragonX – i take issue to your use of the term “FREAKONOMICS”. The Freakanomics books are, at their root, a study of consequences and incentives (both intentional and unintended consequences). The people running government policy certainly don’t understand the economic principles of incentives and unintended consequences. Or perhaps you’re suggesting that they do – and they’re intentionally rewarding bad behaviour and incentivising it further through grants. Which i admit is not impossible – but i think they simply don’t understand the consequences of their policies. That’s the problem with liberal socialist policies – they sound good, but they don’t work. Usually have the opposite effect to the intended. I.E. if you incentivise unemployment or childbirth, you get more of it. If you tax business activity, you get less of it.

Agreed. To put things in perspective, when one walks into a supermarket it is big right? and then the hypermarkets?

Now multiply that space by roughly 400!

I would not rebuild again, I would sell my stuff, pack and leave the country.

The fact is that the looting is part of the country’s history.

My guess is that for some privately owned businesses; smacked by covid, recovering then smacked by unchecked looting anarchy they will take their SASRIA money and pocket it; pay off staff and exit stage left.

Hopefully more will move down to the Western Cape and the economic independence/succession movement will gain more support

The end is near!

This is an admission that enough jobs can never be created for these unemployable looters.

To this anc lot its also not about creating jobs. Its about self-enrichment. What else is this BEE / transformation BS?? It does not ensure the best person to do the job. It ensures a connected uncle, brother etc. will fill a position where nothing constructive is done except destruction and looting!

I say viva anc!! Go for it. You looters from top to bottom deserve what you are creating. a Cesspool of indignity and continuous suffering!!

Rather hand out food parcels than money.

No thanks. Just tenders and ridiculous overheads. Let private supermarkets supply competitively. Unless you are a communist of course. Are you a communist Japie?

No thanks. Just tenders and ridiculous overheads. Let private supermarkets supply competitively. Unless you are a communist of course. Are you a communist Japie?

Compliance??????????????

I must comply. With what? Zuma and family and friends set the bar rather high.

And now Tito & the goon show want to allow people to draw pension money early to help with their debts ; This simply compounds the problem later down the line but I guess the ANC realise by now that it will be someone else’s problem by then !!!

Easy just raise the grant later on when your retirement fund is empty. Only for some that is not all of us.

I read all of this looney tunes cANCer show BS the last few days and I knew I should’ve left this sh-thole country ages ago. Now I’m too old and too poor.

How good the relief may sound, it is once again the taxpayer’s money wasted on the direct cost / loss directly caused by in-fights in the anc, whilst the actual guilty parties are not even capable or in the past did not even contributed a cent towards the tax coffer – what they do not realize is that they just shot themselves in both feet for the rest of their lives – firstly: how many schools are down and out? – there goes their future out the window for ever; secondly – the relief fund is now used for repairs etc where, if the looting did not take place it could have been spent to help the poorest of the poor – for that purpose R36000bil is now lost. This all happened whilst the core of the instigators are for sure not even in jail yet.
another question: Is the R2000mil for non-sasria covered businesses anyhow meant for the informal tin-house businesses along the road or for actual registered businesses???
measured by their incompetence and pathetic performance, saps and sadf does not even deserve a cent of the relief fund.
And be warned: The looting that should never have taken place at all if the government had its ducks in row, can easily be repeated, all just due to political in-fights but at the cost of the sa taxpayer
it is heartbreaking to see how this country is run into the ground by an incompetent cadre employed government with no long term insight to become a zimbabwe in slow motion

Whilst standing in a little moving queue outside a post office trying to renew a car license disc yesterday watching the highly inefficient staff go about their business I had a sudden cynical brain fart. The current bunch of professional looters in government have just about bankrupted every other SOE. What better way to get your greedy hands on more of the fiscus than to create another “fund” to help those caught in the riots. Remember the R500bn?

Maybe 1 of the other commentators can explain why is the borrowing limit expanded by 31+bil if there’s a tax bonanza to be had..??

I personally despise Margaret Thatcher and her neo-liberal socio-economics, but she was dead right when she said: “The problem with socialism is that you eventually run out of other people’s money”.

But for the commodity price boom we would be bankrupt. It is the big mining companies that will pay a fortune in corporate and dividend taxes and these will save the ANC gangsters.

One needs luck as well-and the ANC has had some-it may, however change and then we can see how naked they have been swimming for 27 years.

Imagine what R35 B would do for the social, infrastructural and educational upgrade of Khayelitsha, the second biggest informal settlement in the world? It would change the multi-generational fortunes of tens of thousands of families and have a wonderful knock through effect this very generation. This government is a pack of shameless, wastrel, disgraceful, deceitful, corrupt guttersnipes. They should all be in prison.

I’m tired of hearing “We should , we must ….” all this fall on deaf ears. Even if some minister does take on the job; there is no accountability.

I the government was a listed company; majority of these ministers would be on the dole.

to name a few:
– security cluster,
– transport
– municipalities

How about DEPLOYING THE ARMY AND SECURITY when it was needed?

That lazy and unfit Military … if deployed on time would have saved BILLIONS but your incompetent ANC are implicated and protecting their rot that initiated this!

Dear Mr Mboweni Please thank the Apartheid government for Sasria. Created to cover civil commotion, Public disorder. Strikes, Riots and Terrorism. I hope the Sasria money was put in an untouchable account.

Wow, so the increased tax collection off the commodity boom is going to pay for damage and loss of income and jobs as a result of an internal ANC pi…..ng contest, the looting and anarchy was avoidable if those in charge had been on their A game. That R 35 Billion could have gone towards other relief measures to sort out the damage done by COVID, but hell who cares, it is not the governments money anyway. Mr Kieswetter’s high handed Headmaster approach to taxpayers is wearing a bit thin, the “taxpayers” in this country are on their knees and yet instead of building bridges SARS seems intent on punishing the only people who contribute to the economy, where is the tax owed by Zuma and other higher ups …

The real problem…us taxpayers accept this.
if the top 100 SA located businesses paid no VAT, PAYE and corporate taxes then the ANC would get the message

Agree. Just completed my tax return which showed I had a credit. Of course I was “chosen” for an audit with a standard letter received which asked for some information totally irrelevant to the return so obviously a standard letter. My Auditor assures me that there is a bonus coming for the employee at SARS who can prevent, at all costs, paying out that credit. I guess it is game on?

Stop the economic waste! Seemingly SA always has money to sort out issues. Never has money to be pro active? Our knee jerk FM? SA economic growth has stagnated as a result of the lack of electricity. This fact has now also been acknowledged by the ANC economist recently. This crisis/opportunity non the less, could have been resolved through inclusive growth to allow and design a system for anybody that are able to generate and sell electricity for gain could have participated in the mainstream economy. It is a known fact that SA has been exporting cheap electricity through the manufacturing sector. SA has the potential to grab/reestablish this opportunity??? The tale is wagging the dog?

Crazy culture….rewarding thievery and violence?

Can’t make up this communist crud and brazen vote buying largess by the marxist socialist anc “government”, whose survival and trough feeding elitist troika depends on the free market capitalist taxpayers money!

What SA needs is jobs, jobs, jobs and jobs. The government policies will not provide that in fact their policies through the years have eroded the jobs.
If you were a foreigner would you invest in a country where the rulers are anti white and leaning strongly to a Marxism with EWC still hanging in the air?

End of comments.

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