1. South Africa: National Budget 2011/2012 Kevin Lings Economist 23 February 2010

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3. SA GDP growth (government estimate) %

4. % Fixed Investment Growth (government estimate)

5. % of GDP Current account (government estimate)

6. % Inflation (CPI) (government estimate) CPI forecast

7. Index out of 100 Open Budget Index 2010

8. SA government’s budget 2011/2012 – main indicators. Consolidated budget 2010/20112011/2012% change R billion Revenue755.0824.59.2% Expenditure897.4979.39.1% Budget deficit-142.4-154.8 Deficit as % of GDP-5.3%

9. % Fiscal years Government expenditure & revenue as % of GDP Expenditure as % of GDP Revenue as % of GDP Huge increase in expenditure

10. % Fiscal years, main budget SA budget deficit as % of GDP

11. %Fiscal years SA budget deficit as % of GDP (consolidated budget)

12. Fiscal balance as % of GDP - 2011 %

13. Breakdown of tax revenue (20011/12)

14. Government budget revenue overruns Rbn

15. SA budget revenue overrun in 2010/2011: R16.6bn Rbn

16. 16 Tax incentives Job summit Employment fund IDC

17. Budget revenue increases 2011/2012

18. Main tax proposals 2011/2012 Additions Rm Subtractions Rm Personal income tax Personal income tax adjustment Adjustment in monetary thresholds Business tax Dividend cession scheme 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 500 4 985 1 900 1 935 1 150 -8 350 -8 100 -750 -4 115

19. Personal tax relief in previous tax years ● Tax relief for individuals: ● 1998/1999R4.0bn ● 1999/2000R5.0bn ● 2000/2001R10.0bn ● 2001/2002R8.0bn ● 2002/2003R15.0bn ● 2003/2004R13.0bn ● 2004/2005R4.0bn ● 2005/2006R6.8bn ● 2006/2007R13.5bn ● 2007/2008R8.4bn ● 2008/2009R7.2bn ● 2009/2010R13.0bn ● 2010/2011R6.5bn ● 2011/2012R8.1bn

20. Taxable income (rands). Tax relief of R8.1 billion in 2011/2012 Tax reduction for individuals <65

21. Breakdown of Fuel Levy – R2.61 per litre

22. 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

23. Rbn Customs union payments by SA Government

24. 24 Tax incentives Job summit Employment fund IDC

25. Breakdown of expenditure (including interest)

26. % Budget Expenditure increases in 2011/12 Consolidated national and provincial expenditure

27. Defence Police, courts, prisons Education Health Social security Economic services 13.7 5.6 20.9 10.1 10.8 1990/91 Key expenditure items % of total 05/06 5.7 10.9 18.6 11.2 16.6 11.2 06/07 5.1 10.0 18.2 11.4 15.2 13.5 07/08 4.9 10.2 19.6 11.0 16.3 12.9 4.0 9.6 19.6 11.6 15.6 15.8 08/09 09/10 4.4 9.9 20.0 11.0 15.8 14.2 10/12 4.1 9.8 20.7 12.2 16.0 11.6 10/11 4.1 9.9 20.5 12.0 15.7 13.5

28. ● 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 200610 918 263 ● April 200711 983 141 ● April 200812 374 770 ● April 200913 066 118 ● April 201013 958 894 ● April 201114 892 000 ● April 201215 713 000 ● April 201316 223 000 ● April 201416 709 000 Social grant beneficiary numbers

29. Billions Grown by an average 17.3% p.a. for past 3 year Government salary payments: up 61.5% in past 3 years Budgeted to rise by only 7.9% in 2011/12?

30. Millions Create 5 million jobs in 10 years South Africa’s employment problem

31. 31 Tax incentives Job summit Employment fund IDC

32. 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’

33. Public sector infrastructural spending Rbn R808.6bn

34. 34 Tax incentives Job summit Employment fund IDC

35. National deficit/surplus Extraordinary receipts Extraordinary payments Net borrowing requirement Domestic short-term loans Domestic long-term loans (net) Foreign loans (net) Change in cash balance Total financing Budget 2010/2011 2011/12 -143.36 3.15 -0.80 -141.01 35.10 139.15 -2.27 -30.97 141.01 -159.07 1.35 -0.15 -157.87 22.00 135.37 5.00 -4.50 157.87 Outcome Financing the National Budget

36. Government net domestic long-term bonds issued RbnFiscal years

37. Rbn Fiscal years Government net foreign funding

38. Public sector borrowing requirement RbnFiscal years

39. % Government domestic debt as % of GDP

40. % Government total loan debt as % of GDP

41. % Fiscal years Debt servicing as % of total spending

42. 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 PositiveAims Yes No Yes No Yes No Yes No Yes? No Evaluate the budget

43. 43 Tax incentives Job summit Employment fund IDC

44. Thank You