KLCBT / KPMG Budget Speech Breakfast – Report back on the highlights

February 23rd, 2017

The KPMG budget was well attended and informative as always.

What can we expect?

To achieve the vision of the Constitution, South Africa needs transformation that opens a path to inclusive economic growth and development.

Transformation without economic growth would be narrow and unsustainable.

Growth without transformation would only reinforce the inequitable patterns of wealth inherited from the past.

The World Bank is expecting global growth to be 2.7 percent in 2017, slightly up from 2016.

At the moment global economy is uneven. But, “a subdued recovery is expected for 2017, with receding obstacles to activity in commodity exporters and solid domestic demand in commodity importers”.

Punitive Taxation. Why do we have it? Legislators have 3 needs in mind as they prepare tax laws –

To raise revenue, to influence the taxpayers’ behavior and to be fair to taxpayers.

The GDP growth (%) for South Africa is an estimate for 2016/2017 on 1.0%. 2017/2018 a Forecast of 1.3%, 2018/2019 a Forecast of 2.1% and 2019/2020 a Forecast of 2.3%

An additional R28 billion will be raised in 2017/18. How?

Estimated tax revenue for 2017/18: Majority will be –

Personal Income Tax R482.2 billion

Corporate Income Tax R218.7 billion

Value-added Tax R312.8 billion

Customs and excise duties R246.4 billion

VAT on Fuel

It is proposed that the VAT zero-rating on fuel be removed in 2018, though this could be coupled with a freeze or decrease in the fuel levy

Medical Aid rebates

Tax credit on private medical aid contribution could decline to finance the National Health Insurance

Sugar tax:

To be implemented as soon as the necessary legislation is implemented.