Johannesburg (dpa) – South African Finance Minister Pravin Gordhan laid out the country's budget on Wednesday, putting an emphasis on infrastructure development and job creation, while offering new tax schemes meant to help low and middle-income families. The 1.1-trillion rand (142-billion dollar) budget will include a deficit of 4.6 per cent of gross domestic product (GDP) in the coming fiscal year. The deficit figure is lower than expected and could pacify ratings agencies that have put the country on a negative outlook. The minister also promised the deficit would drop to 3 per cent in the 2014-15 fiscal year. The country had a budget surplus before the global financial crisis struck in 2007-08. Economic growth for 2012 was slightly downgraded – in line with analysts' expectations given the eurozone debt crisis – and GDP is expected to expand by 2.7 percent. Last year, GDP increased by around 3.1 percent. Gordhan said growth would reach 4.2 percent by 2015. Keeping the economy expanding is deemed vital to improving employment opportunities after the country went into recession and shed over 1 million jobs during the global economic downturn. The southern African nation, analysts say, needs growth of 5 or even 7 percent to tackle worrying levels of unemployment. To help boost job creation – with unemployment at about 23.9 percent – the Treasury announced additional spending, including 4.8 billion rands over the next three years for an expanding public works program. Public investment growth will average 4.3 percent annually over the coming three years, according to the budget, in the hopes this will create jobs. Gordhan was critical of some national government departments and provincial authorities, saying they actually spent less last year than was allocated to them, having not completed key projects. As expected, Gordhan laid into smokers and drinkers, with “sin taxes” set to increase. Levies on alcohol will go up by between 6 and 20 percent. Fuel will also become more costly. To help green the economy and bring in more revenue for government, South Africa is also likely to introduce a carbon tax next year. There was good news for small business owners, who would get some tax relief in the coming year, while low and middle income earners will also see the government take less of their earnings. But the rich will pay more, as a capital gains tax will be imposed, along with other levies on profits made on the markets. South Africa is also in the process of rolling out a National Health Insurance (NHI) scheme. The budget noted that to fund the scheme, value-added tax may go up or the country could see a payroll tax introduced for employers. This was the third budget presented by the administration of President Jacob Zuma, who came into office in 2009. BM ShortURL: http://goo.gl/l1xUv Tags: Economy, Infrastructure, South Africa, Taxes Section: Southern Africa
