By Jeremy Michaels, Charles Phalanee, Makhudu Sefara and Christelle Ellis
After years of generous tax cuts, the strong rand has narrowed finance minister Trevor Manuel's scope for providing tax relief this time.
Manuel announced in his Budget speech on Wednesday that tax relief would total R4-billion after R13-billion of cuts last year. The modest reduction is intended to slow down inflation.
Manuel said the government had provided a total of R72-billion in tax cuts since 1994. But as the economy weakened last year, revenue collection slowed.
The revised revenue estimate for the last year is R300,3-billion, which is R4,2-billion less than expected.
"Although economic performance is expected to rebound this year, the weak revenue performance obliges us to be more prudent with tax relief.
"The tax proposals contain a moderate easing of the tax burden on individuals and a somewhat higher tax incidence on tobacco products, alcoholic beverages and fuels," Manuel said.
Unlike other years, when he handed out metaphorical fruits on Budget day to illustrate the benefits of the tough fiscal stance, this year the theme was trees.
A wide variety of indigenous seedlings was presented to MPs to tell South Africa's growth story over 10 years.
The main budget provides for total spending of R370-billion in 2004/05, against expected revenue of R327-billion for a deficit of 3,1 percent of GDP, projected to decline to two percent by 2006/07.
In total, spending over the next three years on services will be more than a trillion rand (R1 000-billion).
Provincial and local governments will receive R195,4-billion of national revenue to deliver improved public services. This is about 62 percent of national revenue after debt servicing and represents about 97 percent of all provincial revenue and 14 percent of local government revenue.
Pension and disability grants will rise by R40 in April to R740 and the child support grant will be raised to R170 a month.
The government's new flagship programme to provide jobs, the Expanded Public Works Programme, will get R15-billion over the next five years.
Manuel has made a further allocation of R2,1-billion for the roll-out of anti-retroviral drugs.
The exemption threshold for transfer duty has risen to R150 000 from R100 000. To assist home buyers further, stamp duty on mortgage bonds will be removed from March 1. Tax-free interest and dividend income for those under 65 will rise from R10 000 to R11 000 and R15 000 to R16 000 for those over 65.
Excise duties on tobacco and beer will rise steeply.
In the next three years, 27 hospitals will be completely upgraded or replaced. Health spending will also include the new rural and scarce skills allowances. These allowances are meant to improve health services in remote areas and help retain highly skilled professional groups.
Local government will receive an extra R2,2-billion to accelerate delivery of municipal services like water and electricity to poor households.
For the full text of the 2004 Budget speech: www.treasury.gov.za/documents/budget/2004/speech/speech.pdf