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BUDGET
SPEECH BULLETIN
th
Relief for citizens as
Government proposes no VAT
or tax increases
The South African economy Mr Mboweni said achieving change to the electricity
is predicted to grow by economic growth and higher regulatory framework”.
a disappointing 0.9% employment levels requires a According Mr Mboweni “new tax
plan, and that over the next 18 increases at this time could harm
this year, with inflation
months, the economy should get the economy’s ability to recover”.
averaging 4.5%, Finance a number of jump-starts. He said To this end, and to stimulate
Minister Tito Mboweni these jump-starts will include, economic activity he announced
told Members of the among other things, “the reform that government had decided
National Assembly when he agenda led by the President, against increasing value added
lower inflation, the interest rate tax (VAT), pay-as-you-earn (PAYE)
delivered his 2020 Budget
reduction earlier this year, the or other personal income taxes.
Speech, writes recent gains in platinum group In some instances, taxpayers
Sakhile Mokoena. metals’ prices and the impending will now pay even less tax.
2 BUDGET SPEECH 2020: BULLETIN
Mr Mboweni added, “our income “With growth of 3.5%, sub-Saharan we expect growth to average just
tax system is progressive, and the Africa is forecast to be the second- over 1%. Therefore, a stable supply
adjustments reflect this. Someone fastest growing region in the world. of electricity will be our number one
earning R10 000 a month will pay Against this backdrop we forecast that task,” added Mr Mboweni.
10% less in tax. Someone earning the South African economy will grow Mr Mboweni presented the budget
and also tabled the Division of
R100 000 a month will pay about by 0.9% and inflation will average
Revenue Bill, the Appropriation Bill,
1.5% less. We are also proposing 4.5% in 2020. Persistent electricity
2020 budget review, 2020 estimates
broadening the corporate income tax problems will, however, hold back
of national expenditure, as well as tax
base,” he said. growth. Over the next three years,
proposals for the year 2020.
Government to propose law to
stop excessive salaries in public
entities – Mboweni
Mr Tito Mboweni, the Minister of Finance, has told Parliament that the
government will propose a law to stop excessive salaries in public entities and
accelerate plans to merge and consolidate some of these entities,
writes Abel Mputing.
“Cabinet approved the publication of a the result of lowering programme
new Public Procurement Bill. We will baselines and the wage bill by R261
accelerate merging and consolidating billion. “These are partially offset by
public entities. We will propose a new additions and reallocations of R111
law to stop excessive salaries in these billion. Of this, more than half, or R60
public entities, and we will also deal billion, is for Eskom and South African
decisively with the excessive high cost of Airways.”
leasing government buildings,” said Mr
Mboweni. Mr MBoweni said while some of these
savings were good for the fiscus, “in
He said the total consolidated many cases we are also making difficult
government spending is expected to and painful sacrifices”.
grow at an average annual rate of 5.1%,
He also reiterated his concern
from R1.95 trillion in 2020/21 to R2.14 “We shall undertake spending reviews
about the bloated public sector
trillion in 2022/23. This, he said, was to ensure that we achieve this objective.
wage bill, which he said would
mainly due to mounting debt-service The second part is adjustments on
have to be adjusted by about R160
costs. Non-interest spending declines on the wage bill by about R160 billion
billion over the medium term.
average over the MTEF (Medium Term over the medium term. Once we get
Mr Mboweni also announced,
Expenditure Framework) in real terms. wage growth, corruption and wasteful
during his 2020 Budget Speech,
“Today we announce a net downward expenditure under control, we will focus
that the government was moving
adjustment to the main budget non- our attention on hiring in important
forward with reforms to the
interest expenditure of R156.1billion areas such as education, police, and
procurement system, with a
over the next three years, relative to the healthcare. We can hire strategically, and
focus on value for money and
2019 budget projections. better match skills with opportunities,”
maximising the quality and
He said the total reduction was mainly Mr Mboweni explained.
quantity of services.
#budgetspeech2020
More spending on health
and education
Minister of Finance, Tito Mboweni, said the government will be allocating more
money on learning and culture and health areas. Learning and culture currently
receives R396 billion followed by health that receives R230 billion, and social
development with R310 billion, writes Mava Lukani.
In his State of the Nation Address, Health Patient Registration System, materials, “and providing them with
President Cyril Ramaphosa said his and is now implementing this system water, electricity and sanitation”.
government has noted the enthusiastic in hospitals. It is also in that context He said: “In 2020/21 the maths,
support from South Africans during the that health is identified as an area for science and technology grant will
public hearings on the National Health more spending. introduce coding and robotics to
learners from Grade R to Grade 3 as
Insurance (NHI), and based on that,
announced by the President. Transfers
the government is putting in place President Ramaphosa said: “A
to provinces support schooling for 13
mechanisms for its implementation fundamental condition for growth
million children and healthcare for
following the conclusion of the and development is a healthy and
49.1 million South Africans,” he added.
parliamentary process. productive population, with access to The Department of Higher Education
quality, affordable healthcare.” and Training will reallocate existing
In preparation for the NHI, he said the In the education sector, Minister funds to undertake a feasibility
government has already registered Mboweni said investment will go to study for the establishment of a new
more than 44 million people at more new schools, to replace schools that university of science and innovation in
than 3 000 clinics in the electronic are constructed with inappropriate Ekurhuleni.4 BUDGET SPEECH 2020: BULLETIN
Modernisation of network industries
and the restructuring of SOEs
One proposal is the modernisation Continental Free Trade Agreement,
Finance Minister Mr
of network industries and the which South Africa is a signatory to.
Tito Mboweni’s budget restructuring of state-owned This is linked to an industrial strategy,
speech sounded a enterprises (SOEs). “Government will which will include “an innovation
sombre note in South do whatever it takes to ensure a stable fund, which will be capitalised with
electricity supply … it is our number R1.2 billion over the next three years,
Africa’s faltering
one task,” the Minister said. “To this an industrial business incentive
economy, writes Abel effect, government has allocated R230 worth R18.5 billion, which will create
Mputing. The Minister billion over 10 years to achieve the and retain approximately 56 500
began by pointing out restructuring of the electricity sector.” jobs. An additional R107 million is
reprioritised for the refurbishment of
how the economy has
A lasting solution to energy challenges 27 industrial parks in townships and
contracted over the past hinges on “determinations to rural economies. And R6.5 billion is
decade. Nonetheless, implement the Integrated Resource allocated for small business incentive
despite poor growth, Mr Plan of 2019”. This will be finalised programmes of which R2.2 billion will
shortly, once the National Energy be transferred to the Small Enterprise
Mboweni said, South Regulator has agreed to the plan. In Development Agency.”
Africa remains the most addition, government has announced
diversified economy on that municipalities will be allowed To streamline all these strategies, the
t to buy energy from independent minister advocated that the cost of
the continent and he
suppliers. doing business in South Africa should
presented a strong plan be lowered. To this end, “the BIZPortal
for future growth. As for South African Airways, Mr will provide a streamlined way to
Mboweni mentioned that business register a new business with the CIPC,
rescue will “lead to a radically SARS, the UIF and the Compensation
restructured airline”. In the budget, Fund in one day.”
government has allocated R16.4
billion to settle SAA’s guaranteed debt The agricultural sector will also play
and interest. a critical role in boosting economy
and “Government has allocated
Government is also committed to open R495.1 million to the Department of
up new markets, promote regional Agriculture, Land Reform and Rural
integration and contribute to economic Development to improve compliance
growth in terms of the African with biosecurity and support exports.”
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