What's in the budget?

The 2011/12 Budget is about making South Africa work smarter, harder and differently, Finance Minister Pravin Gordhan said on Wednesday. Here's a wrap of Pravin Gordhan's budget speech..

JOBS

• The government will spend close to 150 billion rand ($21 billion) over three years to create jobs and tackle an unemployment rate of around 25 percent. Click here for the full article

GRANTS AND PENSIONS

• Old age pension, disability and care dependency grants will increase by R60 a month, to R1,140. Pensioners over 75 will get R20 a month extra. Child support grant to increase from R250 to R260 in April, and to R270 in October. Click here for the full article

SIN TAXES

• Apart from booze and smokes, higher 'sin taxes' will also affect those who splurge on flashy cars. Smokers will have to cough up 80 cents more for a packet of cigarettes, Finance Minister Pravin Gordhan announced in his Budget  on Wednesday. Click here for the full article

TAXPAYERS

• South Africa's super-rich. More than 2000 South African taxpayers earned more than five million rand each during the 2009/10 tax year, according to a document released by the SA Revenue Service and National Treasury on Wednesday. Click here for the full article

TAX EVADERS

• Gordhan said tax and customs evasion remained a serious threat. Working together, the police, the prosecuting authority, the Financial Intelligence Centre and Sars ensured that more than 200 taxpayers were convicted of fraud and tax evasion during the past six months. Click here to view full article

PETROL PRICES

• Levies to push up petrol price. Increases in fuel levy, Road Accident Fund levy, airport tax and electricity. The general fuel levy will increase by 10 cents a litre of petrol and diesel from April 6, Finance Minister Pravin Gordhan announced in his Budget speech on Wednesday. Click here for the full article

HIV / AIDS

• Aids grant to provinces soars. The dedicated HIV/Aids allocation to provinces will increase dramatically over the next three years, according to Budget documents tabled on Wednesday. Click here for the full article

RURAL DEVELOPMENT AND AGRICULTURE

• Funds are being allocated for a further 5,000 recruits to the National Rural Youth Services Corps. This was part of a total R19 billion to be spent on rural development and agriculture in the coming year. Click here for the full article

LAW AND ORDER

• An amount of R12.8 billion has been allocated to the departments  of police, justice, correctional services and the Independent Complaints Directorate, to help the police in their fight against crime, Finance Minister Pravin Gordhan said on Wednesday. Click here for the full article
   

GOVERNMENT'S ROADS AND RAIL TRANSPORT

• R950 million allocated for maintenance of the national road network. The transport sector will receive an additional allocation of R10.3 billion over the next three years to improve infrastructure and services, Finance Minister Pravin Gordhan said on Wednesday. Click here for the full article
   

NATIONAL HEALTH INSURANCE

• This year’s budget takes the first steps in establishing national health insurance (NHI). In addition, a 'family health approach' to primary healthcare is being launched, at a cost of R1.2 billion over the next three years. Click here for the full article

EDUCATION

• More bursaries for FET colleges, and for would-be teachers plus a promise to replace 3,627 informal and unsafe school structures. Click here for the full article

RETIREMENT ANNUITY PRODUCTS

• National Treasury will embark on a review of the annuity market  with the objective of facilitating competition, reducing costs, promoting flexibility, and enhancing disclosure and consumer protection. Click here for the full article

ECONOMY

• South Africa’s economy is likely to grow 3,4% this year, a shade slower than the 3,5% forecast last October. Click here for the full article

HOME AFFAIRS ONLINE

• Treasury has allocated R2.2 billion over five years for the Home Affairs Department's “Who Am I Online” project, which has been stalled by a legal dispute with GijimaAST. Click here for the full article
   

HOUSING AND MUNICIPAL SERVICES

• An additional R4.9 billion will be allocated for housing and municipal services over the next three years. Click here for the full article

2010 WORLD CUP SOCCER

• What did it do for us? A total of 309,544 tourists visited the country for the event, of whom 38% were from Africa, the document said. “Tourist expenditure during the 2010 FIFA World Cup amounted to approximately R4 billion, at an average of R12,000 over a stay of 10 nights.”  Click here for the full article

PROPERTY TRANSFER FEES

• The increase of the transfer duty exemption for properties from R500,000 to R600,000 is welcome news. Click here for the full article

CLASSIFICATION OF FOREIGN-LISTED COMPANIES ON THE JSE

• The JSE welcomes the confirmation in the Budget speech that any change in the classification of foreign companies listed on the JSE will be forward looking only and will not affect the current status of foreign companies listed on the JSE. Click here for the full article

BANKING SECTOR

• South Africa's Treasury says it will tighten oversight of domestic banks to protect individuals from high fees and predatory financial salesmen. Click here for the full article

• For the business sector, it expanded investment in modernising infrastructure and transport logistics, accelerating further education and skills development, and supporting research, technology and industrial investment.

• For the small business sector, there were targeted financial and enterprise development programmes, and tax relief measures.

• Real growth in exports was expected to average 6.5 percent a year over the medium-term as commodity exports benefited from strong demand and high prices.

• Inflation was forecast to remain within the target range of three to six percent, edging towards the upper end of the range in 2013, as the economy strengthened. But, increasing food and oil prices represented risks to the inflation outlook, Gordhan warned.

• Fiscal and monetary policy would continue to work in partnership. "Monetary policy, operated by the SA Reserve Bank, will continue to be focused on controlling inflation, and we will continue to ensure that fiscal policy is countercyclical within a sustainable long-term framework."Government would continue to assist the SARB to accumulate foreign exchange reserves when market conditions were favourable and engage in foreign currency swaps to moderate the effect of capital flows on the exchange rate.

• "Overly rapid currency depreciation carries risks to macro-economic stability, however, and so we expect the governor of the Reserve Bank to be vigilant in monitoring inflationary pressures and ensuring that monetary policy is effective in meeting our inflation targets."

  The credibility of monetary policy in achieving the target inflation range, combined with a commitment to fiscal discipline, were important foundations for moderating exchange rate volatility.

  Gordhan said proposed reforms to the financial sector included a shift to a "twin peak" system of financial regulation, with market conduct under the Financial Services Board, and prudential regulation in the Reserve Bank.
   
  From March 2012, an employer's contribution would be treated as a taxable fringe benefit, and employees would be allowed to deduct up to 22.5 percent of taxable income for contributions to approved retirement funds. A maximum of R200,000 a year would be deductible.

  • Government and state-owned enterprises would spend more than R800 billion over the next three years on new power stations, road networks, dams and water supply pipelines, rail and ports facilities, schools, hospitals and government buildings, Gordhan said.
     
  • The bulk of the 2011/12 consolidated budget of R979.3 billion (projected revenue R824.5 billion) went to social services -- R577.3 billion.
     
  • Social protection followed with a budget of R146.9 billion, reflecting an increase of 10.7 percent; housing and community amenities R121.9 billion (up by 19.5 percent); and health R112.6 billion (by 9.8 percent).
     
  • The public order and safety budget allocation rose by 8.2 percent to R90.9 billion -- police R60.7 billion (up 8.5 percent), prisons R16.5 billion (8.6 percent), and justice R13.7 billion (6.2 percent).
     
  • Transport got R65.6 billion (up 8.4 percent) and defence R38.4 billion (up 13.2 percent).
     
  • There was an unallocated contingency reserve of R4.1 billion
     
  • The projected deficit of 5.3 percent was expected to drop to 4.8 percent in 2012/13, and to 3.8 percent in 2013/14.