Flash Briefing: SA is ‘dangerously overstretched – Tito; Budget snapshots; Rand holds firm; matric maths disgrace

  • Covid-19 containment measures have pushed SA towards a difficult future – and the only hope of changing course is for Eskom to be fixed fast and other reforms to be implemented urgently. Also necessary will be much faster roll-out of Covid-19 vaccines in order to avoid containment measures like lockdowns and other strict rules that put a lid on business activity. That message was underscored in the national budget presented by Finance Minister Tito Mboweni on Wednesday. Mboweni has warned that public finances are “dangerously overstretched”. SA will need to borrow well over R500bn each year and it  “owe[s] a lot of people a lot of money”. These include foreign investors, pension funds, local and foreign banks, unit trusts, insurance companies, the Public Investment Corporation and ordinary SA bondholders, he said.
  • SA expects to record its largest tax shortfall on record by the end of the tax year – and a staggering R213bn less than its 2020 Budget expectations. Personal income tax brackets will be adjusted by 5% to provide relief to mostly lower and middle-income households and corporate income tax will be lowered. To help pay for SA’s army of public servants, fuel levies and excise duties on alcohol and tobacco will increase.
  • South Africa plans to inject R13bn into improving the capability of the South African Revenue Service to improve tax compliance. Mboweni warned that some taxpayers have been identified for investigation and these individuals can expect to receive an unpleasant letter in the post in April.
  • The sunset date for 12J venture capital company tax schemes will not be extended beyond June 30. National Treasury officials say it did not sufficiently achieve its objectives of developing small businesses and creating jobs instead.
  • The poor standard of school education in South Africa has been laid bare in matric results, with only 8% of the 580,000 pupils who sat mathematics achieving the required 60% for entrance to university studies in engineering, commerce and medicine. That’s according to MyBroadband.co.za, which says the figure is even more shocking when looking at the subject drop-out rate. The data shows that of the 1m 1,072,993 students who were enrolled in grade 1 in 2009, only 4% went on to achieve more than 60% in matric Mathematics.

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