Revised Budget to target health and welfare
Mboweni said he would table a new Budget “shortly”, and this would see him strip away “bells and whistles” in the February 2020 Budget that were no longer appropriate, given shifting priorities and economic realities.
In terms of the R500 billion package of health and socio-economic measures announced by President Cyril Ramaphosa on Tuesday, R130bn would be sourced by reallocating money already made available within the existing Budget.
The measures also foresee an additional R20bn going to the health system and R50bn into six months of increased welfare benefits to help the poorest South Africans weather the crisis.
Mboweni said this money could, for the moment, be found within the fiscus.
“The combined effect of these revenue and expenditure measures have naturally changed the fiscal framework. That said, for the next few weeks many of these measures can still be accommodated within the current framework.
“I will shortly be tabling a revised Budget bill to Parliament to deal with all these measures.”
Mboweni told a media briefing relief measures in terms of taxes would include an increase in the expanded employment tax incentive amount from R500 to R750 per employee, a skills-development levy holiday of four months from May and deferring the payment of excise duty on liquor and tobacco products.
He said there would also be a postponement of some of the corporate tax measures announced in the February Budget.
Mboweni also clarified how the increases in social welfare grants would be distributed.
In May, for one month, the grant for children who are beneficiaries of the welfare system will increase by R300. But from June, for five months, this will change in that the caregiver will receive an additional R500 regardless of the number of children in their care.
He dismissed suggestions that the enhanced benefits would have to be extended for more than six months.
The minister said the country's total fiscal and monetary response to the crisis amounted to an R800bn boost for the economy, once monetary policy measures decided by the South African Reserve Bank (SARB) were taken into the equation.
“SARB governor Lesetja Kganyago has already unveiled a monetary and policy package. This will bring additional life into the financial system and use the combined balance sheet of the country in a careful but appropriate way.
“This takes our total economy-wide measures over R800bn. Let me say that again - our combined fiscal and monetary policy package is over R800bn. This is a major fiscal and monetary policy response,” Mboweni said.
The minister said the government’s aim was to devise a “counter-cyclical response feeding directly into the heart of the economy”, as the country was driven deeper into recession by the global health crisis.
African News Agency (ANA)