south africa’s national budget 2019 - stanlib...sa main tax proposals 2019/2020 (+r15 billion)...
TRANSCRIPT
South Africa’s National Budget 2019 Kevin Lings
February 2019
2
5 IMMEDIATE ECONOMIC
CHALLENGES FACING THE
COUNTRY
Clarify transformation policies
Lift business confidence
Restore fiscal discipline
Reform SOEs
Dramatically reduce corruption
1
2
3
4
5
2 MAJOR STRUCTURAL
CHALLENGES FACING THE
COUNTRY
Poor education outcome
High unemployment rates
1
2
0
10
20
30
40
50
60
70
80
90
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Next 3
years
Ranking out of 189 countries
South Africa global ranking: ease of doing business
5559 56
41
29
0
10
20
30
40
50
60
70
2014 2015 2016 2017 2018
Ranking out of 189 countries
Rwanda global ranking: ease of doing business
7
World corruption perception index: South Africa
46 51
43
54 55 54
64 69
72 67
61 64
71 73
30
35
40
45
50
55
60
65
70
75
80
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
World ranking
15
25
35
45
55
65
75
85
95
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Index
SA business confidence (BER)
9
Private sector fixed investment as % of GDP
10
11
12
13
14
20
14
20
15
20
16
20
17
20
18
%of GDP
54.7%
67.6%
30
40
50
60
70
Q4 2018 Q4 2018
%
South Africa youth unemployment rate
Including discouraged workers
Excluding discouraged workers
3.2 3.1
4.3
2.6
0.5
2.4
4.2
2.7
3.72.9
4.65.3 5.6 5.4
3.2
-1.5
3.0 3.3
2.2 2.51.8
1.30.6
1.30.7
1.5 1.72.1
-3
-2
-1
0
1
2
3
4
5
6
7
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
%y/y
SA GDP annual growth rate (government estimate)
Government forecast
8.2
10.79.0
5.7 4.8
-7.6
3.92.8 3.5
10.2
12.911.0
12.113.8
12.8
-6.7
-3.9
5.5
2.6
7.2
-4.1
2.1 3.0
-0.2
3.4
0.7 0.41.5
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
16
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
%y/y
SA growth in fixed investment (government estimate)
Government forecast
Open budget index 2017
0 20 40 60 80 100
South AfricaNZ
SwedenNorwayMexico
USBrazil
UKFrance
ItalyRussia
GermanyPortugal
CzechSouth Korea
TurkeyChile
ThailandSpain
NamibiaArgentina
GhanaIndia
KenyaMalaysiaMorocco
NigeriaVietnam
ChinaBotswana
ZambiaSaudi
Index out of 100
SA budget deficit as % of GDP
-0.8
-2.5-1.9
-0.6
1.21.7
-1.1
-6.5
-4.3-3.6
-4.1-3.6 -3.7 -3.6
-4.0 -4.2 -4.5 -4.3 -4.0-3.7
-7
-6
-5
-4
-3
-2
-1
0
1
2
3
'02
/03
'03
/04
'04
/05
'05
/06
'06
/07
'07
/08
'08
/09
'09
/10
'10
/11
'11
/12
'12
/13
13
/14
14
/15
15
/16
16
/17
17
/18
18
/19
20
/21
21
/22
22
/23
% Fiscal years
SA primary budget balance as % of GDP
-0.5
-0.3
-0.1
-0.4 -0.4
-0.6
-0.3
0.1
-0.7
-0.6
-0.5
-0.4
-0.3
-0.2
-0.1
0.0
0.1
0.2
14/15
15/16
16/17
17/18
18/19
19/20
20/21
21/22% Fiscal years
SA Rand/Dollar during the budget speech
Breakdown of SA tax revenue (2019/2020)
Excise duties
3.0%
Individuals
39.4%
Customs duties
4.3%
Other
3.0%
Companies
18.7%
Fuel levy
5.9%
VAT
25.7%
SA budget revenue over-runs/under-collection
8.2 6.5 5.214.9 13.3
-5.1
20.9
41.2
29.5
13.4
-14.5
-66.4
16.624.8
-14.0 -11.6
-30.4
-48.2-42.8
-16.3
12.0
-75
-65
-55
-45
-35
-25
-15
-5
5
15
25
35
45
1998/99
1999/00
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19Rbn, relative to the original budget and not the MTBPS
SA main tax proposals 2019/2020 (+R15 billion)
Additions
Rm
Subtractions
Rm
Personal income tax
Fiscal drag: revenue from not fully adjusting for inflation
Medical tax credit adjustment
Indirect taxes
Increase in general fuel levy
Introduction of carbon tax on fuel
Increase in excise duties
Additional VAT zero rate items
GAIN ON TAX PROPOSALS
13 800
12 800
1 000
1 200
1 800
1 000
15 000
-500
-1 100
100
120
140
160
180
200
220
240
260
280
300
320
340
360
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Cents per litre
South Africa’s fuel levy
5.1
5.2
7.9
8.4
9.2
10.1
10.6
11.1
0 2 4 6 8 10 12
Corporate tax
Excise duties
Customs duties
Skills development levy
Total revenue
Fuel levy
VAT
Personal income tax
%y/y
SA budget revenue increases in 2019/20
SA growth in individual income tax
12.7 13.211.9
20.1
15.6
5.1
10.6 10.3 10.212.3
13.9
9.78.6 7.9
11.110.0
0
2
4
6
8
10
12
14
16
18
20
22
'04/05
'05/06
'06/07
'07/08
'08/09
'09/10
'10/11
'11/12
'12/13
13/14
14/15
15/16
16/17
17/18
18/19
19/20% Fiscal years
Inflation has averaged 5% over the period
Estimates of individual taxpayers contribution
Percentage of
personal tax
before tax
adjustments
Percentage of
personal tax after
2018/2019 tax
changes
R0 to R70 000 0.0 0.0
R70 000 to R150 000 1.9 1.8
R150 000 to R250 000 6.6 6.5
R250 000 to R350 000 9.0 9.0
R350 000 to R500 000 13.7 13.7
R500 000 to R750 000 16.1 16.1
R750 000 to R1 000 000 12.0 12.0
R1 000 000 to R1 500 000 11.9 11.9
R1 500 000+ 28.9 28.9
Customs Union payments by SA government
1.8 2.8 3.0 3.1 3.2 3.9 4.4 5.2 5.6 7.2 8.4 8.2 8.3 9.713.314.1
25.224.728.927.9
17.921.8
42.243.4
51.751.0
39.4
56.0
48.350.3
65.865.4
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
90
/91
91
/92
92
/93
93
/94
94
/95
95
/96
96
/97
97
/98
98
/99
99
/00
00
/01
'01
/02
'02
/03
'03
/04
'04
/05
'05
/06
'06
/07
'07
/08
'08
/09
'09
/10
'10
/11
'11
/12
'12
/13
13
/14
14
/15
15
/16
16
/17
17
/18
18
/19
19
/20
20
/21
21
/22
Rbn
SA breakdown of expenditure 2019/2020
State Debt, 10.4
Defence, 2.8
Public Order and Safety, 8.8
Economic Affairs, 11.1
Environmental Protection, 0.6
Housing and Community, 8.6
Health, 12.2
Recreation and Culture, 0.7
Education, 21.8
Social Protection, 16.3
2.3
5.3
6.9
8.0
8.1
8.9
9.2
10.0
10.4
16.0
0 2 4 6 8 10 12 14 16 18
Defence
Public Order and Safety
Health
Recreation and Culture
Social Protection
Total
Housing and Community
Education
State Debt Cost
Environmental Protection
%y/y
SA budget expenditure increases in 2019/20
Consolidated national and provincial expenditure
700
750
800
850
900
950
2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18
Provincial government employment Thousands
Number of people obtaining a social grant
2000 2 946 618 2012 15 199 000
2003 5 808 494 2013 15 857 000
2004 7 941 562 2014 15 765 000
2005 9 406 829 2015 15 928 000
2006 10 918 263 2016 16 970 000
2007 11 983 141 2017 17 237 000
2008 12 374 770 2018 17 616 000
2009 13 066 118 2019 17 920 000
2010 14 624 580 2020 18 235 000
2011 14 624 580 2021 18 564 000
SA Social Grant Beneficiary Numbers
160
210
260
310
360
410
460
510
560
610
660
710
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
2021/22Billions
Government compensation of employees
SA government net domestic long-term bonds
-20
0
20
40
60
80
100
120
140
160
180
200
89/90
90/91
91/92
92/93
93/94
94/95
95/9696/97
97/98
98/9999/00
00/01
01/02
02/03
03/0404/05
05/06
06/0707/08
08/09
09/1010/11
11/1212/13
13/14
14/1515/16
16/17
17/1818/19
19/20
20/21
21/22
Rbn Fiscal years
Foreign holding of SA bond market
0
5
10
15
20
25
30
35
40
45
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018Percentage of market
SA government net foreign funding
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
35
40
45
50
55
97/98
98/99
99/00
00/01
01/02
02/03
03/04
04/05
05/06
06/07
07/08
08/09
09/10
10/11
11/12
12/13
13/14
14/15
15/16
16/17
17/18
18/19
19/20
20/21
21/22
Rbn Fiscal years
SA government debt outlook
41.1
43.7
46.5
48.9
50.6
52.7
55.1 55.356 56.2
52.7
55.656.2
57.8
58.9
40
42
44
46
48
50
52
54
56
58
60
62
12
/13
13
/14
14
/15
15
/16
16
/17
17
/18
18
/19
19
/20
20
/21
21
/22
Rbn Fiscal years
2018/2019 Budget
February 2018
2019/2020 Budget
February 2019
SA government gross loan debt as % of GDP
10
15
20
25
30
35
40
45
50
55
60
65
88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22
%
SA debt servicing costs as % of total spending
5
7
9
11
13
15
17
19
21
23
89/90
90/91
91/92
92/93
93/94
94/95
95/96
96/97
97/98
98/99
99/00
00/01
01/02
02/03
03/04
04/05
05/06
06/07
07/08
08/09
09/10
10/11
11/12
12/13
13/14
14/15
15/16
16/17
17/18
18/19
19/20
20/21
21/22
% Fiscal years
SA government contingent liabilities
100
200
300
400
500
600
700
800
900
1000
1100
06/07
07/08
08/09
09/10
10/11
11/12
12/13
13/14
14/15
15/16
16/17
17/18
18/19
19/20
20/21
21/22Rbn Fiscal years
Contingent liabilities average annual growth 13.5% since 2009
Other, 151.3
Eskom, 306.8
Independent power
producers, 153.8
SAA, 17.3
SANRAL, 30.3
Trans-Caledon
Tunnel, 19.4
Road Accident
Fund, 252.5
Government contingent liabilities 2019/2020
R billion
38
Growth in fixed investment spending by SOEs
-10
-5
0
5
10
15
20
25
30
35
40
45
50
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
% year-on-year, 4-quarter moving ave
0
1
2
3
4
5
6
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
Credit rating
South Africa’s credit rating by S&P
SA international credit rating
BB
BB+
BBB-
BBB
BBB+
A-
Investment grade cut-off
0
1
2
3
4
5
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Rating class history
South Africa sovereign rating by Moody’s
Baa3
Baa2
Baa1
A3
A2
Ba1
Investment grade cut-off
SA 10-year government bond yield
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
%, yield
Inflation target introduced in February 2000
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
13.0
14.0
15.0
16.0
17.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Rand per US Dollar
Rand exchange rand against US Dollar
Evaluating the SA national budget
Negative Positive
Budget objectives clearly stated No
Budget deficit contained No
Revenue :
Appropriate composition No
No ad hoc measures Yes
Efficiency of collection No
Spending:
Appropriately allocated Yes
Public sector salary increases contained Yes
Increases in public sector investment No
Positive impact on the economy:
Growth No
Inflation Yes
Encouraging private sector investment No
Help encourage job creation No
Provide poverty relief/welfare Yes
Encourage savings No
Encourage small business No
Innovation No
Thank you