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Confident Budget from Minster Pravin Gordhan| News by Staff Reporter
Finance Minister Pravin Gordhan presented the 2014 Budget figures in the Cape Town Parliament today.
A confident Mr Gordhan told parliament that the economy is on track, after improved export figures from a weaker rand and a fourth-quarter 2013 spurt in GDP growth, resulted in an over-budget collection of taxes (R4 billion) for the year though March.
He suggested that the strikes in the mining sector were now largely resolved and that GDP growth should resume an upward course.
Gross Domestic Product growth for 2014 is projected at 2.7%, with 2015 at 3.2% and 2016 at 3.5%. Gordhan warned that a growth rate exceeding 5% per annum is required to make substantial progress in job creation and poverty alleviation.
GDP for 2014/15 is estimated at R3 789 billion.
Adjustment of tax brackets for inflation (elimination of bracket creep) saw some 9.3 billion in tax relief for lower income earners. Excise duties are to be increased on cigarettes and alcohol by 6-12%. The general levy on fuel and the Road Accident Fund levy will increase by a joint 20c per litre on 2nd April, 2014.
The entire tax haul was broken down as: personal income tax: 33.8%, VAT: 26.9%, company tax: 20%, customs and excise: 8.2%, fuel levy: 4.8% and other: 6.3%.
The three-year spending plan includes: R410bn on social grants, R143 billion for municipal infrastructure of which some R45 billion will go to water and sewage bulk infrastructure, 99 billion for land restitution claims, 98 billion for universities and higher-education, and 34 billion for schools infrastructure.
Government spending is to be strictly controlled and monitored, said the Minister.
The Minister projected that the deficit would remain at 4 percent of GDP next year, before narrowing to 3.6 percent and 2.8 percent in the following two years.
Inflation is expected to reach 6.2% in 2014, declining to around 5.5% in 2016.
Markets showed little initial reaction to the budget, remaining steady, although the Rand strengthened slightly in late trade.