South African Minister of Finance Trevor Manuel managed to keep the Budget deficit below 3% and squeeze in personal tax relief of R4-billion in a Budget that contained few surprises.
Commentators expected the Budget deficit to exceed 3% of the gross domestic product, due to lower tax receipts and demands for increased social spending. The deficit now stands at 2,6%.
South Africa can apparently sustain a deficit in the 3% range without running up too much debt.
Revenue is expected to be R327-billlion — up from last year’s R300-billion. Expenditure rises to R369-billion up from R331-billion.
Education has received R75,9-billion -‒ including an additional R1-billion for higher-education restructuring.
Health got R42,6-billion and also received an additional R2,1-billion for the fight against HIV/Aids.
Welfare and social security spending is R59,9-billion and housing and other social services received R18,3-billion. Police, prisons and courts receive R40,2-billion compared with last year’s R36-billion. Economic services received R39,4-billion.
On the tax front, total income-tax relief is R4-billion, which has shrunk considerably from last year’s R13-billion.
The threshold for people who do not pay income tax has been raised to R32Â 222 a year from R27Â 800.
Speaking to journalists, Manuel acknowledged increased social spending has put pressure on the state’s coffers in the short term.
Special Report: The Budget 2004