A merciless Pravin Gordhan klapped motorists, smokers, drinkers and the rich with tax increases during his budget speech on Wednesday.
This as government seeks to plug a R28 billion revenue hole this year.
Tabling the R1.56 trillion 2017 Budget in the National Assembly, the finance minister also had a tough message for South Africans — tighten your belts and demand accountability from the State.
Gordhan announced hard-hitting increases in personal income tax of R16.5bn for 2017/18‚ as economic growth stutters, state debt creeps up and government collected R30bn less tax than expected.
This is the largest under-performance since the 2009 recession and Gordhan said he was concerned about the state of revenue collection and had been engaging with senior management of the South African Revenue Service (Sars) about this.
Despite fears, Gordhan, once again held off on increases in VAT and income tax for lower end earners, but had no mercy for the wealthy, announcing a new tax bracket of 45 percent for the estimated 100 000 mense who earn at least R1.5 million a year.
This will raise R4.4bn in income for the state.
Motorists may want to consider walking or taking public transport as Gordhan announced a massive 39c fuel hike from April, pushing the petrol price up to R13.53 at the coast.
There was also sobering news for drinkers and smokers.
The price of entjies are going up by between six percent and 10 percent, while wine, beer and spirits are increasing by 11 percent, 23 percent and 36 percent respectively.
Gordhan told journalists before tabling his budget speech that this was his way of taking care of people’s hearts and lungs.
“We have taken care of your stuff,” he quipped.
The good news to the 17 million social grant beneficiaries is that they will receive increases in April despite the uncertainty on who will be making their payments.
The old age grant is to increase by R95 to R1500, the disability grant by R90 to R1600 and the foster care and child support grants by R30 and R20 respectively.
Meanwhile, land claimants may finally see light at the end of a long, dark tunnel — in an unprecedented move, a third of the Department of Rural Development and Land Reform’s R32bn budget is being set aside to settle restitution claims.
In other good news, small businesses, the lifeblood of any country’s economy, are getting a much needed cash injection of R3.9bn from government.
Gordhan said about 2 000 small, medium and micro enterprises (SMMEs) would be provided with financial support to help them become competitive, sustainable, job-creating firms.
“A youth employment service programme has been initiated with the aim of creating a million work opportunities over the next three years,” he says.
Gordhan said his budget was prepared to strengthen economic growth and societal transformation.
“In the year ahead, our focus must be on inclusive growth and transformation action plan. In this way we can all embrace a vision of substantive meaningful transformation which will allow us to say we all own our economy,” he said.
He said the country’s finances looked good for the next three years.
“There is enough money in the system to do the many things we want to do,” he said.
In a message directed to departments and public entities, Gordhan said: “Use the money we have wisely with greater diligence.”
The house gave Gordhan a standing ovation when he concluded.