South African Minister of Finance Trevor Manuel has revised upward by R29,6-billion the government’s projected revenue collections for the 2006/07 financial year. The sharp increase — to R486,4-billion from R456,8-billion estimated in February’s national budget — was attributable largely to higher-than-expected collections in corporate and individual income tax.
As a result, the government’s national budget deficit for 2006/07 has been revised downward to only 0,4% of GDP from 1,5% of GDP in the February budget. This compares with a deficit of 0,3% of GDP for the 2005/06 financial year.
Introducing his latest Medium-Term Budget Policy Statement (MTBPS) in Parliament on Wednesday, Manuel said the strong revenue collections were attributable to faster economic growth in the country. Actual revenue collections for the financial year to date have outpaced estimates by over R17-billion, the South African Revenue Service reported recently.
According to the MTBPS, once additional payments to Southern African Customs Union countries are accounted for, main budget revenue was expected to rise by R20-billion in 2006/07 to R466,4-billion (26,7% of GDP) from R446,4-billion in 2005/06.
For the current financial year, collections from personal income tax have been revised upward to R138,8-billion from R133,2-billion in February, while those for corporate tax has been lifted to R115,9-billion from R96,3-billion previously. Secondary Tax on Companies (STC) should bring in R15,2-billion, up from R13,9-billion in the February Budget, and property tax collections are forecast at R10,3-billion versus R8,9-billion.
Forecasts for revenue from taxes on goods and services are relatively unchanged, with value-added tax at R132,9 billion from R131,2-billion previously, and collections from excise duties and fuel levies both unchanged at R16,6-billion and R21,8-billion, respectively.
Manuel has raised the estimates for main budget revenue over the next three financial years in the MTBPS as well, due to expectations of continued strong economic growth. For 2007/08, projected budget revenue has been revised by a massive R51-billion to R543-billion from R492-billion in the February budget. This represents 28,2% of GDP, higher than the government’s general target of 25% of GDP.
For 2008/09, main budget revenue is revised to R586,5-billion (27,7% of GDP) from R547,1-billion previously, and for 2009/10 it has been pencilled in at R633,5-billion (27.2% of GDP). — I-Net Bridge