South Africa:
National Budget 2011/2012
Kevin Lings
Economist
23 February 2010
2
SA GDP growth (government estimate)
%
6
5
4
3
5.3 5.6 5.6
4.3
4.2
2
3.2 3.1
2.1
1
2.4
4.6
4.2
2.6
2.4
3.7
2.7
4.1 4.4
3.6
3.4
2.9
2.8
1.2
0
0.0
-1.2
-1
0.5
-0.3
-1.0
-2.1
-1.7
-2
-3
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Fixed Investment Growth (government estimate)
%
17
14
11
8
14.0 14.1
12.9
10.7
5
8.2
5.7 4.8
2
-1
10.2
9.0
3.9
-0.6
-2.3
-7.4
3.9
2.8 3.5
-2.2
-5.3
-4
11.0
12.1
5.5
6.8
-3.6
-7.6
-7
-10
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Current account (government estimate)
% of GDP
7
6
5
4
3
2
1
0
-1
-2
-3
-4
-5
-6
-7
-8
-9
6
4.1 4.2
2.8
1.6 1.4 1.2 1.5 2.1
0
-1.7 -1.2 -1.5 -1.8
-0.5 -0.1
0.3 0.8
-1
-3 -3.5
-4.1
-5.3
-3.2
-4.2
-4.9 -5
-7 -7.1
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Inflation (CPI) (government estimate)
%
11
10
9
8
7
CPI forecast
6
5
9.9
4
3
7.1
6.1
5.6
4.3
2
4.9
5.2
5.5
11
12
13
3.2
2.1
1
0
-0.9
-1
-2
03
04
05
06
07
08
09
10
Open Budget Index 2010
Index out of 100
South Africa
New Zealand
UK
France
Norway
Sweden
US
Chile
Brazil
South Korea
Germany
India
Spain
Czech Republic
Russia
Italy
Portugal
Turkey
Argentina
Ghana
Namibia
Mexico
Botswana
Kenya
Thailand
Malaysia
Zambia
Morocco
Angola
Nigeria
Vietnam
China
Saudi Arabia
0
20
40
60
80
100
SA government’s budget 2011/2012 – main
indicators. Consolidated budget
2010/2011
2011/2012
% change
R billion
R billion
Revenue
755.0
824.5
9.2%
Expenditure
897.4
979.3
9.1%
Budget deficit
-142.4
-154.8
Deficit as % of GDP
-5.3%
-5.3%
Government expenditure & revenue as % of GDP
%
Fiscal years
Huge increase in expenditure
35
34
Expenditure as % of GDP
33
32
31
30
29
28
27
26
Revenue as % of GDP
25
24
11/12
10/11
09/10
08/09
07/08
06/07
05/06
SA budget deficit as % of GDP
Fiscal years, main budget
%
2
1
-1
-2
-3
-4
-5
-6
-7
-8
-9
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
1967
1966
1965
1964
1963
1962
1961
SA budget deficit as % of GDP (consolidated budget)
%
Fiscal years
3
2
1
1.7
0
-1.2
-1
-3.8
-2
-5.3
10/11
11/12
-3
-5.3
-4.8
-6.6
-4
-5
-6
-7
-8
13/14
12/13
09/10
08/09
07/08
-12
China
Mexico
Germany
Russia
Brazil
Emerging economies
Italy
Euro Area
Canada
South Africa
France
Spain
Advanced economies
Britain
Japan
India
%
United States
Fiscal balance as % of GDP - 2011
0
-2
-4
-6
-8
-10
Breakdown of tax revenue (20011/12)
Electricity levy
0.9%
Customs
4.0%
Excise duties
3.4%
Individuals
34.1%
Fuel levy
5.0%
Other
6.1%
VAT
27.1%
Companies
19.4%
Government budget revenue overruns
Rbn
45
35
25
41.2
15
5
8.2
6.5
14.9
5.2
29.5
20.9
13.3
16.6
13.4
-5.1
-5
-14.5
-15
-25
-66.4
-35
-45
-55
-65
-75
2010/11
2009/10
2008/09
2007/08
2006/07
2005/06
2004/05
2003/04
2002/03
2001/02
2000/01
1999/00
1998/99
SA budget revenue overrun in 2010/2011: R16.6bn
Rbn
VAT
Custom duties
Personal Tax
Other tax revenue
Fuel levy
Property taxes
Corporate Tax
Excise duties
SACU
Provinces/public entities
-10
-5
0
5
10
15
20
IDC
Employment fund
Job summit
Tax incentives
16
Budget revenue increases 2011/2012
-4
Transfer duties
-2
0
2
4
6
8
10
12
14
-2.7
Fuel levy
7.6
Skills development levy
8.7
Companies
8.8
9.5
Excise duties
STC
9.7
TAX REVENUE
10.3
VAT
10.8
Individuals
10.9
Customs duties
13.1
After tax proposals
Main tax proposals 2011/2012
Additions
Rm
Personal income tax
Personal income tax adjustment
Adjustment in monetary thresholds
Business tax
Dividend cession scheme
-8 350
-8 100
-750
500
500
Taxes on property
Adjustment in transfer duties
Indirect taxes
Increase in fuel levy
Increase in excise duties
Increase in electricity levy
LOSS ON TAX PROPOSALS
Subtractions
Rm
-750
-750
4 985
1 900
1 935
1 150
-4 115
Personal tax relief in previous tax years
● Tax relief for individuals:
● 1998/1999
R4.0bn
● 1999/2000
R5.0bn
● 2000/2001
R10.0bn
● 2001/2002
R8.0bn
● 2002/2003
R15.0bn
● 2003/2004
R13.0bn
● 2004/2005
R4.0bn
● 2005/2006
R6.8bn
● 2006/2007
R13.5bn
● 2007/2008
R8.4bn
● 2008/2009
R7.2bn
● 2009/2010
R13.0bn
● 2010/2011
R6.5bn
● 2011/2012
R8.1bn
Tax reduction for individuals <65
Taxable income (rands). Tax relief of R8.1 billion in 2011/2012
60000
495
65000
495
70000
495
75000
80000
495
85000
495
90000
495
100000
120000
495
495
495
150000
1195
200000
1195
250000
1895
300000
400000
1895
2895
500000
3615
750000
4175
1000000
4175
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Breakdown of Fuel Levy – R2.61 per litre
Customs &
Excise Levy
1.5%
Road Accident
Fund Levy
30.6%
General Fuel
Levy
67.9%
Other tax issues:
● New tax bracket/threshold for people aged 75 years and older
● New tax on gambling (15% on winnings over R15 000)
● Threshold for interest income raised only fractionally (R22 300 to R22 800
for under 65, and R32 000 to R33 000 for 65 and over)
● International air passenger departure tax increased (R150 to R190 per
passenger)
● Discussion on a possible carbon tax
Customs union payments by SA Government
Rbn
30
25
20
15
28.9 27.9
25.2 24.7
21.8
10
17.9
13.3 14.1
9.7
11/12
10/11
09/10
08/09
07/08
06/07
96/97
05/06
95/96
04/05
94/95
03/04
93/94
8.3
02/03
92/93
8.2
01/02
7.2
99/00
91/92
5.6
98/99
3.2
5.2
97/98
3.1
90/91
0
3.0
3.9
1.8
2.8
4.4
8.4
00/01
5
IDC
Employment fund
Job summit
Tax incentives
24
Breakdown of expenditure (including interest)
Other
6.9%
Public Order and
Safety
9.8%
Defense
4.1%
Economic Affairs
11.6%
State debt cost
8.3%
Housing and
community
10.4%
Education
20.7%
Social Protection
16.0%
Health
12.2%
Budget Expenditure increases in 2011/12
Housing and community
17.1
State debt cost
15.0
Defense
13.3
Social Protection
10.7
Health
10.3
Education
10.0
Total
9.1
Public Order and Safety
Economic Affairs
8.2
-6.8
-10
%
-5
•Consolidated national and provincial expenditure
0
5
10
15
20
Key expenditure items % of total
1990/91
05/06 06/07 07/08 08/09 09/10 10/11 10/12
13.7
5.7
5.1
4.9
4.4
4.0
4.1
4.1
5.6
10.9
10.0
10.2
9.9
9.6
9.9
9.8
Education
20.9
18.6
18.2
19.6
20.0
19.6
20.5
20.7
Health
10.1
11.2
11.4
11.0
11.0
11.6
12.0
12.2
Social security
10.8
16.6
15.2
16.3
15.8
15.6
15.7
16.0
11.2
13.5
12.9
14.2
15.8
13.5
11.6
Defence
Police, courts, prisons
Economic services
Social grant beneficiary numbers
● Number of people obtaining a social grant
● April 2000
2 946 618
● April 2003
5 808 494
● April 2004
7 941 562
● April 2005
9 406 829
● April 2006
10 918 263
● April 2007
11 983 141
● April 2008
12 374 770
● April 2009
13 066 118
● April 2010
13 958 894
● April 2011
14 892 000
● April 2012
15 713 000
● April 2013
16 223 000
● April 2014
16 709 000
Government salary payments: up 61.5% in past 3
years
Billions
Budgeted to rise by only 7.9%
in 2011/12?
320
280
Grown by an average 17.3%
p.a. for past 3 year
240
200
160
2011/12
2010/11
2009/10
2008/09
2007/08
South Africa’s employment problem
Millions
Create 5 million jobs in 10 years
19
18
17
16
15
14
13
12
11
10
2020
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
IDC
Employment fund
Job summit
Tax incentives
31
Fiscal measures to improve employment:
● Youth employment subsidy: R5 billion over 3 years. Tax credit
administered by SARS. Expected to create 178 000 new jobs
● Learnership tax incentive extended for 5 years, but will be reviewed (was
due to expire in Sep 2011. Have not been widely used)
● Training layoff scheme has utilised R21.3 million in training allowances
and supported 7 286 workers
● Expanded public works programme budgeted at R73 billion over next 3
years
● Jobs fund: R9 billion. Available to both private and public sector. Expected
to employ 50 000 to 100 000 over the ‘medium term’
Public sector infrastructural spending
Rbn
R808.6bn
350
300
250
200
150
260.1
252.8
2010/11
2011/12
235.2
100
269.3
286.4
196.5
130.2
70.7
83.6
2005/06
2006/07
50
0
2013/14
2012/13
2009/10
2008/09
2007/08
IDC
Employment fund
Job summit
Tax incentives
34
Financing the National Budget
2010/2011
Outcome
2011/12
Budget
-143.36
3.15
-0.80
-141.01
-159.07
1.35
-0.15
-157.87
35.10
22.00
139.15
135.37
-2.27
5.00
Change in cash balance
-30.97
-4.50
Total financing
141.01
157.87
National deficit/surplus
Extraordinary receipts
Extraordinary payments
Net borrowing requirement
Domestic short-term loans
Domestic long-term loans (net)
Foreign loans (net)
Government net domestic long-term bonds issued
Fiscal years
Rbn
160
140
120
100
80
60
40
20
0
-20
13/14
12/13
11/12
10/11
09/10
08/09
07/08
06/07
05/06
04/05
03/04
02/03
01/02
00/01
99/00
98/99
97/98
96/97
95/96
94/95
93/94
92/93
91/92
90/91
89/90
Government net foreign funding
Rbn Fiscal years
35
30
25
20
15
10
5
0
-5
-10
13/14
12/13
11/12
10/11
09/10
08/09
07/08
06/07
05/06
04/05
03/04
02/03
01/02
00/01
99/00
98/99
97/98
Public sector borrowing requirement
Rbn
Fiscal years
320
300
280
260
240
220
200
180
160
140
120
100
80
60
40
20
0
-20
13/14
12/13
11/12
10/11
09/10
08/09
07/08
Government domestic debt as % of GDP
%
50
45
40
35
30
25
20
15
10
78
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
10
12
14
Government total loan debt as % of GDP
%
55
50
45
40
35
30
25
20
15
10
86
88
90
92
94
96
98
00
02
04
06
08
10
12
14
Debt servicing as % of total spending
Fiscal years
%
23
21
19
17
15
13
11
9
7
5
13/14
12/13
11/12
10/11
09/10
08/09
07/08
06/07
05/06
04/05
03/04
02/03
01/02
00/01
99/00
98/99
97/98
96/97
95/96
94/95
93/94
92/93
91/92
90/91
89/90
Evaluate the budget
Aims
Budget should be guide to govt's intentions
Budget deficit contained
Spending - efficiency
Revenue - no ad hoc measures
- efficiency of collection
Positive impact on the economy - Growth
- Inflation
Exchange control relaxation
Encouraging private sector investment
Unemployment and Job creation
Law & Order, Crime and Violence
Poverty relief
Encourage savings
Encourage small business
Innovation
Negative
Positive
Yes
Yes
No
Yes
Yes
Yes
No
No
Yes
Yes
No
Yes
No
Yes?
No
IDC
Employment fund
Job summit
Tax incentives
43
Thank You