CAPE TOWN – Finance minister, Enoch Godongwana, has delivered budget speech under critical crisis South Africa face. The blame was labelled on corruption and state capacity, it has lowered the economic growth potential, made the fiscally more vulnerable, and severely weakened the capability of the state.
The minister said accounting officers need to ensure that their procurement processes have integrity, provide value for money, and are free from interference from politically connected persons and bidders.
“We also need to be clear on what we are fighting.
“We must differentiate between corruption and minor transgressions of the rules of policy prescripts that are audited as irregular expenditure,” Godongwana said.
He said the National Treasury (NT) is engaging with the Auditor-General to continue to ensure transparent disclosure of minor transgressions, but outside the financial audit process.
“As I indicated last year, the Public Procurement Bill will be tabled before Parliament in 2022/23.
“In light of the recent Constitutional Court judgement on the preferential procurement regulations, and the first Zondo Commission report highlighting abuses in state procurement.
“The government is revising the Bill to take account of these developments.
“We will also be responding formally to the Zondo,” he said.
Meanwhile, government must take bold steps to improve state capability and reduce the scope for procurement corruption.
“Working with SARS, the Investigative Directorate in the office of the National Directorate of Public Prosecutions, has brought charges against a company Director and a Gupta associate involved in the corrupt ESTINA Dairy project,” Godongwana said.
Godongwana said there are charges of fraudulent VAT refund claims, under-declaration of plant and equipment expenses, and exchange control violations.
SARS is also recovering the fraudulent refunds that were claimed.
“We are also dealing with illicit trade,” claimed the minister.
On Wednesday, SARS conducted a search and seizure operation.
This operation uncovered another consignment of illegal tobacco products, bringing the total value of illicit tobacco seized during the pandemic to over R350 million.
Overall, SARS has raised assessments of R18 billion additional duties, cancelled the trading licenses of 3 operators, liquidated one operator, and referred 8 cases for criminal prosecution.
“Finally, we are addressing the weaknesses in fighting fraud and money laundering identified in our recent mutual evaluation of our anti-money laundering system by the Financial Action Task Force (FATF),” Godongwana elaborated.
Households and businesses are still under financial pressure and are coping with higher obligations, the effects of COVID-19 and increased fuel prices.
Now is not the time to increase taxes and put the recovery at risk. Accordingly, they have decided to keep money in the pockets of South Africans.
This Budget includes R5.2 billion in tax relief to help support the economic recovery, provide some respite from fuel tax increases, and boost incentives for youth employment.
Personal Income Tax
The personal income tax brackets and rebates will be adjusted by 4.5 percent, in line with inflation.
The budget adjustments will mean that the annual tax-free threshold for a person under the age of 65, will increase from R87 300 to R91 250.
Medical tax credits will increase from R332 to R347 per month for the first two members, and from R224 to R234 per month for additional members.
Employment tax incentive
The employment tax incentive will be expanded through a 50 percent increase in the maximum monthly value to R1 500.
“I encourage small and medium firms to take up this incentive.
“We anticipate that the expansion will provide additional support worth R2.2 billion. Fuel Levies, in 2021, the inland petrol price breached R20 per litre.
The higher prices have put pressure on the cost of transport, food and other goods and services,” the minister said.
To provide some relief to households, no increases will be made to the general fuel levy on petrol and diesel for 2022/23. This will provide tax relief of R3.5 billion to South Africans.
There will also be no increase in the Road Accident.
Minister Mantashe and I have agreed that a review of all aspects of the fuel price is needed. Government teams have already begun to engage on this critical work.
Corporate Income Tax
Restructuring the corporate income tax system is an important part of the efforts to create a conducive environment for businesses to grow, increase investment and employ more people.
As announced in the 2021 Budget, the corporate income tax rate will be reduced from 28 percent to 27 percent, for companies with years of assessment ending on or after 31 March 2023.