13 February 2009
	THE BUDGET IN BRIEF In his own words Faced with a possible leftist lurch after the upcoming national election, finance minister Trevor Manuel stuck to long-term principles this week in what many observers believe could be his last budget . In an environment of global economic crisis, he made it clear this was a time for prudence and consistency

Swan song or continuing chorus leader? It's not the first time questions have been asked about Trevor Manuel's desire to remain finance minister, but with a new government (and possibly new president) taking office in a few weeks, and new wife watching from the gallery, speculation is rife. Analysts and journalists pored over his words, anxious to pounce on anything that could be interpreted as weariness. This is what Manuel had to say about: The global economic crisis A transformation of the world economy is in progress, which we trust will tame the excesses of unregulated financial markets. A restructuring of global trade and incomes is under way which we hope will bring greater opportunities to the world's poor. SA's economic outlook Incomes and output slowed sharply in the second half of last year, bringing growth for 2008 to about 3,1%. Growth in 2009 is forecast to be 1,2%, the lowest rate since 1998. Spending highlights The largest adjustments to spending plans go to poverty reduction: R25bn is added to the budgets of provinces, mainly for education and health care; R13bn for social assistance grants and their administration; and R4bn to the school nutrition programme. A further R3,7bn is added for low-income housing projects and R4,1bn for the second phase of the expanded public works programme. The budget deficit Though the budget deficit will rise to 3,8% of GDP next year, debt service costs will remain moderate over the next three years, at about 2,5% of GDP. In 1996 public debt was 48% of GDP and rising. Today, it is 23%. The public-sector borrowing requirement for next year is expected to be 7,5% of GDP. Public expenditure Total government spending next year will amount to R834bn, including the second tranche of the R60bn loan to Eskom. Real growth in spending on public services will average 5,1% over the next three years. Education Government's contribution to public education remains our single largest investment. Education spending has grown 14% annually for the past three years and accounts for R140,4bn in provinces and national government for 2008/2009. Health An additional R1,8bn is budgeted to introduce three new child vaccines which have proved effective in preventing infant and child deaths. The TB and HIV/Aids programmes both receive additional resources. Criminal justice A further R5,4bn is allocated to improving criminal justice services, creation of an integrated fingerprint and DNA database, improving detective capacity, upgrading IT and telecommunications systems and increasing the number of police officials from 183 000 last year to over 204 000 in 2011/2012. Land reform The budget for land reform and land restitution over the next three years totals R20,3bn. Housing Housing and the eradication of informal settlements remain at the forefront of our infrastructure investment plans. In the past three years, the municipal infrastructure grant programme has spent about R32bn. Over the next three years, infrastructure grants to municipalities total R67bn, and a further R45bn will be spent on the Breaking New Ground housing programme. Social grants The budget adds R13,2bn to our social grants programme. Extension of the child support grant to 15 takes effect this year and the reduction in the eligible pensionable age for men to 60 is in progress. From April, the maximum values of the monthly old-age, disability and care dependency grants will rise by R50 to R1 010, the foster care grant will increase to R680 and child support to R240. SA Airways We are budgeting R1,6bn for SAA to support its turnaround strategy, which includes reducing costs and improving efficiency. I am sure the House will agree with my hope that this will not be a recurring allocation. Government departments There is insufficient control of foreign travel, advertising and public relations activities and consultancy services. Stricter oversight of the activities and executive remuneration in agencies and government enterprises is required. A greater sense of responsibility needs to permeate the ethos of government all the way through the accountability chain. Tax revenue The main budget revenue estimate is R50bn lower than we projected in February last year, against the background of slower growth, depressed trade and declining company profits. In setting the gross tax revenue target of R659bn, we have taken into account the need to provide relief to households and encouragement to the business sector, while continuing to broaden the tax base through which the requirements of the fiscus have to be met. Personal income tax The proposed adjustment to the personal income tax schedules will provide relief of R13,6bn to individual taxpayers. The tax-free income threshold next year will be R54 200 for taxpayers below the age of 65 and R84 200 for those over 65. Mining royalties I propose to defer the mining royalties regime from this year to 2010. This provides a boost to the industry of about R1,8bn, to help minimise job losses. The environment An incentive for investments by companies in energy-efficient equipment will be introduced, in the form of a supplementary depreciation allowance. An increase is proposed in the international air passenger departure tax, which was last raised in 2005/2006. Existing excise duties on motor vehicles will be adjusted to take into account carbon emissions. Customs & excise A packet of 20 cigarettes will cost 88c more. A bottle of wine will cost 10,5c more, and a can of beer 7c more. Mr At du Plooy has written: "Please be a little more lenient on the tax on whisky for the old folks. We have so little to enjoy, you know things that used to happen after dark, no longer happen. All we have left to enjoy is a little entertainment before supper." He asks for leniency, reminding me that this will ultimately be for my own benefit as well. A bottle of whisky, Mr Du Plooy, goes up by R3,21. WHAT IT MEANS Education the big winner More funds to fight poverty Fuel levies There will be increases in the fuel levies on April 1 this year, of 23c/ and 24c/ in respect of the general petrol and diesel levies, and 17,5c in the Road Accident Fund levy. Twenty-three percent of the general fuel levy will be earmarked for metropolitan municipalities to support expenditure on roads and transportation. Vat, tax administration The Vat threshold is increased from R300 000 to R1m. Taxpayers, practitioners and employers can look forward to the return of the traditional tax season deadlines this year. The Tax Season 2009 timetable includes a 60-day reconciliation period for employers in April and May. Tax season for individuals starts in July. The deadline for income tax returns for individuals and trusts is September 18 for manual filers and November 20 for electronic submissions.