Hansard: NA: Budget Speech

House: National Assembly

Date of Meeting: 23 Feb 2022

Summary

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Minutes

UNREVISED HANSARD
NATIONAL ASSEMBLY
WEDNESDAY, 23 FEBRUARY 2022
PROCEEDINGS OF HYBRID NATIONAL ASSEMBLY SITTING
Watch video here: PLENARY (Budget Speech)


The House met at 14:01.
The Speaker took the Chair and requested members to observe a
moment of silence for prayer or meditation.

ANNOUNCEMENT

The SPEAKER: Hon members, before we proceed with today’s business, I wish to announce that the vacancies which occurred in the National Assembly owing to the resignation of Mrs D B
Ngwenya and Mr P Sindane have been filled, with effect, from 10 December 2021, by the nominations of Ms P Marais and Mr A Matumba respectively.

The vacancy which occurred owing to the passing away of Mr D M Nkosi has been filled by the nomination of Mr C N Malematja with effect from 25 January 2022. The vacancy which occurred owing to the resignation of Ms S N
August has been filled by the nomination of Mr B N Herron witheffect from 2 February 2022.
Lastly, the vacancy which occurred owing to the passing away of Mr M N Nxumalo has been filled by the nomination of Mr S S
Zondo with effect from 8 February 2022.
The members have made and subscribed the oath and affirmation in the Speaker’s Office. I welcome you, hon members.
[Applause.]
Hon members, I wish to remind you that in the interests of safety for all present in the Chamber, please keep your masks on and sit in your designated areas. Thank you.

APPROPRIATI0N BILL

(Introduction)
DIVISION OF REVENUE BILL
(Tabling)
SECOND ADJUSTMENTS APPROPRIATION (2021-22 FINANCIAL YEAR) BILL

(Introduction)

The MINISTER OF FINANCE: Hon Speaker, His Excellency Mr Cyril Ramaphosa, President of the Republic of South Africa, His Excellency Deputy President Mr David Mabuza, Cabinet colleagues, I have the honour of having a guest, the Minister
of Finance of the Democratic Republic of the Congo, who is with us today ... [Applause.] ... the Governor of the SA Reserve Bank ... [Applause.] ... the Commissioner of the SA Revenue Service ... [Applause.] ... fellow South Africans:
INTRODUCTION?


It is my honour and privilege to table before this House the 2022 National Budget.? Today I am tabling the following documents:

The 2022 Division of Revenue Bill;
The 2022 Appropriation Bill;
The Second Adjustments Appropriation (2021/22
Financial Year) Bill;
The Estimates of National Expenditure;
The 2022 Budget Review; and

The Budget Speech.
Madam Speaker, we stand here galvanised by the state of the nation address delivered by His Excellency President Cyril Ramaphosa. The President reminded us that even as we face
steep and daunting challenges, as we have done in the past, we will overcome.?
To do so, we need to strike a critical balance between saving lives and livelihoods, while supporting inclusive growth. This Budget presents this balance. Our economic recovery has been uneven and risks remain high. We must proceed with caution.

In the 2021 Medium-Term Budget Policy Statement, the MTBPS, we committed ourselves to charting a course towards growth and fiscal sustainability. ?This Budget reasserts this commitment.
It narrows the budget deficit and stabilises debt. It also extends income and employment support to the most vulnerable, addresses service delivery shortcomings and provides tax
relief. We will come back in a moment to those areas. However, these interventions cannot replace the structural changes our economy needs. Difficult and necessary trade-offs are required.

ECONOMIC OUTLOOK
Global outlook?
The world economy is expected to grow by 4,4% this year. This is lower than the 4,9% we anticipated when tabling the MTBPS.
The Omicron variant of the coronavirus caused many countries to impose restrictions to manage its spread. In addition, continued imbalances in global value chains have limited the pace of the world’s economic recovery.????


DOMESTIC OUTLOOK
The South African economy has not been insulated from these global developments. We have revised our economic growth estimate for 2021 to 4,8%, from 5,1% at the time of the
tabling of the MTBPS. This revision reflects a combination of the impact of changes in the global environment, along withour own unique challenges.
Commodity prices, which have supported our economic recovery, slowed in the second half of 2021. Also, violent unrest inJuly and restrictions imposed to manage the third wave ofCOVID-19 further eroded the gains we made in the first half ofthe year. Industrial action in the manufacturing sector,
particularly in the state sector, and the re-emergence of loadshedding also slowed the pace of the recovery. Real GDP growth of 2,1% is projected for 2022, which is an upward revision from what we said at the time of the Medium-Term Budget Policy
Statement. Over the next three years, GDP growth is expected to average about 1,8%.


THE FISCAL FRAMEWORK??
Revenue collection
Tax collections since the time of the MTBPS have been much stronger than expected. We now estimate tax revenue for 2021- 22 to be R1,55 trillion. This is R62 billion higher than our
estimates from four months ago, and R182 billion higher than our estimates from last year’s budget. [Applause.] This follows a shortfall in the previous year of R176 billion when
compared to the 2020 budget forecasts. This positive surprise has come mainly from the mining sector owing to higher commodity prices.
The improved revenue performance is not a reflection of an improvement in the capacity of our economy. As such, we cannot plan permanent expenditure on the basis of short-term
increases in commodity prices. To be clear, any permanent increases in spending should be financed in a way that does not worsen the fiscal deficit. We have also seen higher
revenue from other sectors and other tax instruments, such as personal income tax and value-added tax.

This year marks the 25th anniversary of the establishment of the SA Revenue Service. The SA Revenue Service plays a vital role in the economy, and we congratulate them on this momentous occasion. [Applause.] We also welcome the current
modernisation of its infrastructure at border posts, such as the Beitbridge border post, to facilitate greater trade.

The fiscal outlook
Hon members, more than R308 billion has been directed towards bailing out failing state-owned companies. Since 2013, frontline services and infrastructure reduced by R257 billion.
In this Budget, we are shifting from this trend, and are restoring our focus on the core functions of government. We are also on course to close key fiscal imbalances and restore
the health of our public finances.
Our debt burden remains a matter of serious concern. This year, government debt has reached R4,3 trillion and is projected to rise to R5,4 trillion over the medium term. This
huge sum is owed to lenders domestically and around the world! It incurs large debt-service costs, averaging R330 billion annually over the Medium-Term Expenditure Framework period, or
MTEF period. These costs are larger than spending on each of health, policing or basic education. For this reason and to
support the economic recovery, we are reducing the fiscal deficit and stabilising debt in this budget. [Applause.]
The consolidated budget deficit is projected to narrow from 5,7% of GDP in 2021-22, to 4,2% of GDP by 2024-25.? We now expect to realise a primary fiscal balance – where revenue
exceeds noninterest expenditure – by 2023-24.
The debt ratio will stabilise at about 75% of GDP by 2024-25.
This is 3 percentage points lower than we had projected when we tabled the MTBPS. Can you notice that all of these things are positive? [Applause.]
This is also the first time since 2015 that we are reducing the borrowing requirement, using some of the extra revenue we have collected.
The borrowing requirement decreases by R135,8 billion this
year and by a total of R131,5 billion over the next two years.

Risks to the fiscal framework
Though the fiscal outlook has improved, it is subject to significant risks. These include, amongst other things:
• Slowing global and domestic economic growth and calls for a permanent increase in social protection that exceed available resources;
• Pressures from the Public Service wage bill; and
• Continued requests for financial support from financially distressed state?owned enterprises.
We need to stay vigilant and mitigate the risks where possible. In the upcoming period, we will do more work to strengthen fiscal anchors.
We will also reduce the continual demands on South Africa’s limited public resources from state-owned companies. For this reason, SOCs need to develop and implement sustainable turnaround plans.

The future of our state-owned companies is under consideration by the Presidential State-Owned Enterprises Council. Their future will be informed by the value they create and whether
they can be run as sustainable entities without bailouts from the fiscus. Some state-owned companies will be retained, while others will be rationalised or consolidated.
To reduce their continuing demands on South Africa’s public resources, the National Treasury will outline the criteria for government funding of state-owned companies during the upcoming financial year ...
IsiXhosa:
... benditshilo ke kuqala, yile nto bendithe yi ...
English:
tough love! [Laughter.]
We are aware that Eskom’s debt situation remains a concern for
its creditors and our investors alike. Government continues to
support Eskom to remain financially sustainable during its


 
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transition. To date, Eskom has been provided with R136 billion
to pay off its debt with a further R88 billion until 2025-26.
We acknowledge, however, that Eskom is faced with a large
amount of debt that remains a challenge to service without
assistance. That means that if you dissect Eskom’s debt, there
is a component of it which is called distress debt. Whatever
Eskom can do; it cannot fund it. In one way or another, we
have to create some magic in the fiscus to deal with this. I
just wanted to explain that more explicitly.
The National Treasury is working on a sustainable solution to
deal with Eskom’s debt in a manner that is equitable and fair
to all stakeholders. Any solution will be contingent on
continued progress to reform South Africa’s electricity sector
and Eskom’s own progress on its turnaround plan and its
restructuring.
We expect Eskom to take further steps towards cost
containment, conclude the sale of assets and implement
operational improvements to enhance the reliability of
electricity supply. The outcome of this work, which is legally


 
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and technically complex, will be announced within the next
financial year.
We have taken action to reform the electricity sector. This
encompasses the lifting of the registration threshold of
embedded generation to 100 Megawatts. It also includes
amendments to the Electricity Regulation Act of 2006, and the
new generation projects that are coming online over the next
few years.
These interventions demonstrate the commitment of this
government to solving South Africa’s electricity supply
challenges.
SUPPORTING ECONOMIC RECONSTRUCTION AND RECOVERY
We have had more than a decade of economic stagnation. Only
through sustained economic growth can South Africa create
enough jobs to reduce poverty and inequality, enabling us to
reach our goal of a better life for all.
The Economic Reconstruction and Recovery Programme, the ERRP,
remains essential to growth. We are accelerating the


 
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implementation of critical structural reforms contained in the
ERRP, in particular in electricity, rail, ports and
telecommunications.
Infrastructure
To complement these interventions, we will be accelerating
infrastructure investment which is the backbone of a thriving
economy.
The National Treasury will be implementing the results of a
recently completed review of the Public-Private Partnerships
framework.
We aim to create a centre of excellence for public-private
partnerships and other blended finance projects. This centre
of excellence will be established with direct Treasury
oversight. It will be a direct interface with private
financial institutions for investments in critical government
infrastructure programmes.
We will also work with other national departments and the
provinces of the Eastern Cape and the Northern Cape to pilot a


 
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revised approach to infrastructure delivery. You would recall
that this is a message that was given in the state of the
nation address, and we are following through on that message
and giving content to it. This approach will include
innovative financing and delivery mechanisms, as announced by
the President in the state of the nation address.
Regarding the Umzimvubu Dam, we are at an advanced stage of
resolving the project issues. We will make further
announcements on this in the MTBPS.
In October, I will table amendments, through the 2022 Division
of Revenue Amendment Bill, to enable provinces to pledge their
infrastructure grants to leverage more financing to fast-track
the roll-out of infrastructure.
Mr President, in the state of the nation address you spoke
about the importance of catalytic and blended finance
projects. These projects have the potential to crowd in
private investors for bulk infrastructure.


 
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As we upgrade roads, bridges, water and sewer, transport,
school infrastructure and hospitals and clinics, the aim is to
unlock higher levels of employment for those involved in the
projects.
I am pleased to inform this House that a provisional
allocation is set aside in this Budget for R17,5 billion over
the MTEF for infrastructure catalytic projects. We look
forward to engaging with specific proposals in this regard.
Value for money and quality of delivery are the top priorities
in the development of the project pipeline.
Bounce-back scheme to support SMEs
To support businesses in distress owing to the COVID-19
pandemic, a new business bounce-back scheme will be launched,
using two mechanisms which will be introduced sequentially.
Firstly, small business loan guarantees of R15 billion will be
facilitated through participating banks and development
finance institutions. This will allow access for qualifying
nonbank small and medium loan providers.


 
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Government will partner with loan providers by underwriting
the first 20% of losses for banks and other eligible small and
medium loan providers. The eligibility criteria, including the
requirement for collateral, have been loosened. This mechanism
will be launched and operational next month.
Secondly, by April this year, we intend to introduce a
business equity-linked loan guarantee support mechanism. We
intend to bring the total support package through the bounce-
back scheme to R20 billion.
The equity support mechanism of this scheme will be
facilitated through development finance institutions. It will
also be available to qualifying nonbank small and medium
finance providers. Details of the terms of the equity-linked
guarantee mechanism will be provided soon.
Public employment
Over the medium-term, R76 billion is allocated for job-
creation programmes. In this Budget, an additional
R18,4 billion is made available for the Presidential
Employment Initiative.


 
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We do not aspire to being a below-2%-growth economy. We are
capable much more. In this regard, we are refining proposals
for an expanded reform agenda – to shift our economy towards a
higher growth trajectory.
SPENDING PROPOSALS
In this Budget, we are taking steps to support education and
health, to support the fight against crime and corruption, and
to improve capital investment, amongst other things. Over the
next three years, we will allocate R3,33 trillion to the
social wage to support vulnerable and low-income households.
This is approximately 60% of noninterest spending.?
We have prioritised spending on the following key areas. In
2017, government announced a policy for fee-free higher
education. We are announcing an additional allocation of
R32 billion for financial support to current bursary holders
and first-year students under the National Student Financial
Aid Scheme. [Applause.] ?Any further shortfalls will be funded
from within the baseline of the Department of Higher
Education.


 
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At the height of COVID-19, our teachers had to make tremendous
sacrifices to ensure that our children got educated. Equally,
our health care workers were among those that were the last
and only line of defence against the pandemic.
In this Budget, we are adding R24,6 billion for provincial
education departments to address the shortfalls in the
compensation of teachers. [Applause.] An additional
R15,6 billion is allocated to provincial health departments to
support their continued response to COVID-19, and to bridge
shortfalls in essential goods and services.
An amount of R3,3 billion is allocated to absorb medical
interns and community service doctors. An amount of
R8,7 billion is added to the Police budget. [Applause.] The
department is allocated R1 billion to implement personnel
reforms. Another R800 million may be available in the
following year, subject to satisfactory progress at the
Department of Defence.
We are also strengthening the resourcing of the justice system
and our courts. In this regard, the budget of the Department


 
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of Justice and Constitutional Development is increased by
R1,1 billion, while the Office of the Chief Justice receives
an additional R39,9 million. [Applause.]
The SA National Roads Agency, Sanral, receives an additional
R9,9 billion for maintaining the non-toll road network. Over
and above this, the Budget Facility for Infrastructure has
approved funding for several water projects:



R2,1 billion is allocated for raising the Clanwilliam
Dam;
The Lepelle Water Board is allocated R1,4 billion for the
Olifantspoort and Ebenezer plants; and
The Umgeni Water Board is allocated R813 million for the
Lower uMkhomazi Water Supply Scheme.
I am also pleased to announce that the project to modernise
six border posts, including Beitbridge, is at an advanced
stage of preparation. Feasibility studies have been completed
and a request for proposal will be issued in March 2022.


 
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We watched in outrage and sadness as flames devoured the
buildings in which our Constitution was born. I am gratified
to learn of the enthusiasm of most South Africans who want to
be part of rebuilding Parliament, and I look forward to a
truly national effort for this.
The Department of Social Development will receive the largest
allocation of R58,6 billion over the medium term for the
following:

Firstly, to initiate a new extended child support grant
for double orphans. This is to encourage the care of
orphans within families rather than foster care.
[Applause.]


Secondly, to provide for inflationary increases to
permanent social grants.
For the 2022-23 fiscal year, the old age, war veterans,
disability and care dependency grants will increase by
R90 in October. [Applause.] The foster care and child
support grants will increase by a once-off R20 in April.


 
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Thirdly, R44 billion is allocated for a 12-month
extension of the R350 social relief of distress grant or
SRD grant. [Applause.]
The social relief of distress grant was introduced in 2020-21
as a temporary relief measure in view of the plight of those
who had lost economic opportunities and who were adversely
affected during the worst periods of the pandemic. This
emergency grant added to the country's already extensive
social safety net. South Africa now pays grants to more than
46% of the population.
Finally, the 2022-23 contingency reserve is increased by
R5 billion. This provides for an amount already approved in
the previous budget for the Land Bank to be paid in the new
financial year.
To come back to the Land Bank issue: We couldn’t make the
transfer during this financial year precisely because of the
difficulties of settling with the lenders on time. Progress is
being made with settling with the lenders and, we think, by
the beginning of the financial year, we will make progress and


 
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we are making that R5 billion available for the next financial
year.
We remain committed to controlling those parts of the Budget
that are permanent in nature, including by arresting
historically rapid increases in the public sector wage Bill.
Compensation spending will increase marginally, from
R665,1 billion in 2021-22 to R702 billion in 2024-25, at an
average annual rate of 1,8%.??
As indicated in the 2021 MTBPS, we have allocated additional
funding of R20,5 billion in 2022-23 to meet the cost
implications of the 2021 public service wage agreement.?
A Public Sector Labour Summit is scheduled to take place from
28 March to 31 March.? This summit is an important opportunity
for stakeholders to engage in building a sustainable public
service and remuneration guidelines.


 
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DIVISION OF REVENUE
Basic municipal services require more support, especially for
the poor. To address this, R28,9 billion is added to the local
government equitable share.
We are making these allocations to uplift and provide services
to our people. These funds must be used for the purpose they
are meant for. Currently, 175 out of 257 municipalities are in
financial distress. We stand ready to work with Parliament and
all oversight bodies to hold municipalities accountable for
delivering these services.
At the same time, our municipalities and other institutions
cannot survive if they do not receive payment from those who
consume their services. [Applause.]
We urge our people and government departments to pay their
municipal bills. Municipalities are also required to improve
their service delivery mechanisms, and to ensure that billing
systems are fair and efficient. [Applause.]


 
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CORRUPTION AND STATE CAPABILITY
Corruption is a major blight on our country. It has lowered
our economic growth potential, made us fiscally more
vulnerable, and severely weakened the capability of the state.
Accounting officers need to ensure that their procurement
processes have integrity, provide value for money, and are
free from interference from political people like me.
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.
The National Treasury 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 this Parliament.


 
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In light of the recent Constitutional Court judgement on the
preferential procurement regulations, and the first Zondo
Commission report highlighting abuses in state procurement, we
are revising the Bill to take account of these developments.
We are also responding formally to the Zondo Commission
report. In the meantime, we 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.
This is on charges of fraudulent VAT refund claims, under-
declaration of plant and equipment expenses, and exchange
control violations. The SA Revenue Service is also recovering
the fraudulent refunds that were claimed.
We are also dealing with illicit trade. Just yesterday, Sars
conducted a search-and-seizure operation. This operation


 
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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 licences of three operators,
liquidated one operator, and referred eight 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; what is called “Fart”.
[Laughter.] [Interjections.] No; that is how it is spelt.
[Laughter.]
TAX PROPOSALS
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! [Applause.] Accordingly,


 
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we have decided to keep money in the pockets of South
Africans. [Applause.]
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.
Madam Speaker, our tax proposals for 2022-23 are as follows.?
Personal Income Tax?
The personal income tax brackets and rebates will be adjusted
by 4,5%, in line with inflation.? The 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. What in practice
...
IsiXhosa:
... Tata uMantashe ithetha ukuthi, ndiqala ukukubhatalisa
irhafu xa umvuzo wakho wonyaka ufikelele ... xa umvuzo wakho
wonyaka ungaphantsi kwamawaka angama-90 andikubhatalisi
irhafu. Ithetha loo nto ke. Yena ndizakumhlawulisa irhafu.
[Uwele-wele.]


 
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English:
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?%
increase in the maximum monthly value to R1 500.? I encourage
small- and medium-sized 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, on
food and other goods and services.
?
To provide some relief to households, no increases will be
made to the general fuel levy on petrol and diesel for 2022-
23. [Applause.] This will provide tax relief of R3,5 billion.


 
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IsiXhosa:
Intle le ntetho-nzibulo. Niyabona ukuba ndinesisa?
English:
So that’s R3,5 billion to South Africans. [Applause.] There
will also be no increase in the ... But before I step off the
subject of a fuel increase, there is a sentence I have not
inserted here. I’ve had discussions with the Minister of
Mineral Resources and Energy. [Interjections.] We are in
agreement. We have set up teams. The intention is to review
the fuel price – it’s structure moving forward. This is
because the intention is to make sure that we have a petrol
price that is competitive for this economy. So our teams will
make the announcement in due course. [Applause.]
There will also be no increase to the Road Accident Fund levy
... no increase, again.
IsiXhosa:
Yhooo, hayi madoda! [Kwaqhwatywa.] [Uwele-wele.]
English:


 
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There is no increase to the Road Accident Fund levy.
Minister Mantashe and I have agreed that a review of all
aspects of the fuel price is needed. Our teams have already
begun to engage with this critical work.
Corporate Income Tax?
Restructuring the corporate income tax system is an important
part of our 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% to 27% for companies, with years of
assessment ending on or after 31 March 2023. This will be
complemented by base-broadening measures to ensure that there
is no negative impact on revenue.
Excise duties??
Excise duties on alcohol and tobacco will, unfortunately,
increase by between 4,5% and 6,5%. The increases mean that as
from today:


 
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A 340 ml can of beer or cider will cost 11 cents more;
A 750 ml bottle of wine will be 17 cents more expensive;
A bottle of sparkling wine will cost an additional 76
cents;

And a bottle of spirits ...
IsiXhosa:
... aba bethu ke sisela iwiski noko asibahlanga, ...
English:
... it will be R4.83 more expensive;


A packet of cigarettes will cost an additional R1.03;
25 grams of piped tobacco will cost an extra 37 cents;
and

A 23-gram cigar will be ...
IsiXhosa:
... noko isiga bantakwethu masiyithi ... iphezulu,
English:
... R6.77 more expensive. [Applause.] [Interjections.]


 
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Government also proposes to introduce a new tax on vaping
products of at least R2.90 per millilitre from 1 January 2023.
The rationale for that is not part of the tax system. We have
to go through the processes required by law of consultation
and all of that. I would have preferred to introduce it today.
A new tax will also be introduced on beer powders.
After three years of no changes, the health promotion levy
will be increased to 2.31 cents per gram of sugar.
The structure of the economy will need to change to adapt to
the needs of addressing climate change. As we reduce
emissions, communities must not be left behind as production
shifts to greener solutions.
There are opportunities to access international finance to
help pay for this just transition. The National Treasury is
working with the new head of the Presidential Climate Finance
Task Team, on accessing these resources.
IsiXhosa:


 
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Kukho abantu ke bathe mandiphume elubala (transparent)
kusekutsha ngolu hlobo. Andazi ukuba ndizakuphuma elubala
njani kuba kaloku ingekafiki imali. Andazi ukuba ndizakuphuma
elubala njani ndingekayifumani.
English:
I don’t know how that works. [Laughter.]
The carbon tax is the main mechanism to ensure that we lower
our greenhouse gas emissions. The carbon tax rate will
increase from R134 to R144, effective from 1 January 2022.
As required by legislation, the carbon fuel levy will increase
by 1 cent to 9 cents per litre for petrol, and 10 cents per
litre for diesel from 6 April 2022.
The first phase of the carbon tax, with substantial allowances
and electricity price neutrality, will be extended to 31
December 2025.
However, in line with our commitments at COP 26, the carbon
tax rate will be progressively increased every year to reach


 
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$20 per tonne. In the second phase from 2026 onwards, the
carbon tax rate will have larger annual increases to reach at
least $30 by 2030, and the allowances will rapidly fall away.
As the allowances fall away, we urge all our companies that
have not already done so to develop plans to progressively
reduce their emissions over the next 10 years, otherwise they
will face not only my taxes but have difficulty in exports.
Our exporters will also face overseas border taxes for carbon-
intensive goods such as iron ore and steel, which will reduce
their competitiveness.?
Madam Speaker, you will note that we have not increased taxes
in the major revenue-generating categories, such as personal
income tax, VAT and the general fuel levy. We have reduced the
corporate tax rate and broadened the tax base.?
However, let me restate my earlier caution in that if there
are permanent expenditure increases in the coming years, we
would have no choice but to revisit ...


 
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IsiXhosa:
... sinithi nje kancinci.
English:
We will have to look at increasing some of the taxes ...
IsiXhosa:
... kwakhona. Uyayibona loo nto?
English:
In these trying times and without compromising our ability to
collect revenue, we have managed, through these tax proposals,
to keep money in the pockets of South Africans and to create
conditions for greater investment in the economy. Somebody
will say: Oh, you said you had R182 billion last year.
IsiXhosa:
Phuma elubala uyenzeni? Nicinga ukuba kutheni le nto
ndinganibhatalisi irhafu? Ndisebezisa yona laa mali.
[Kwahlekwa] [Kwaqhwatywa.]
English:


 
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That’s why we are not increasing taxes. When we get such big
amounts of money and so on, we transfer that and put money
into your pockets. That’s what we have done.
IsiXhosa:
Xa niphuma apha nizakuthi akaphumi elubala. Kwakhona fundani
...
English:
... the budget review. [Inaudible.] ... on tax you are on
chapter 4; on debt chapter 7.
Financial sector reforms
Retirement funds play a critical role in channelling savings
into productive investments. There has been an outcry about
Regulation 28 of the Pension Funds Act. This regulation sets
out the criteria through which these funds may make
investments.
After consultation, changes have been proposed to these
regulations to enable greater investment in infrastructure by


 
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these funds. After consultation on these changes, the
amendments will be gazetted next month.
IsiXhosa:
Kudala nindibuza ngale nto. Wonke umntu nakweyiphi na
itlanganiso kuthiwa, ...
English:
... regulation 28, regulation 28. Next month, ...
IsiXhosa:
... ndiyifaka kwiphepha-ndaba lombuso (gazette), ngo Matshi
lo.
English:
Government has also proposed a fundamental restructuring of
the retirement system for individuals to allow for greater
preservation and partial access to funds through what is
called a “two-pot” system.


 
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Part of this proposal includes the possibility of short-term
access, which would be dependent on the approval by trustees
of each fund. Let me just explain this. There is a ...
IsiXhosa:
... wonke umntu uyandibuza apha. Kuthiwa uTito wasithembisa
ukuba uzakusinika imali.
English:
Are you going to give us? No, I can’t give you money from your
own pension fund. Your own pension fund has its own trustees.
The decision to take money out of the fund must be a decision
of a trustee. The only thing I am going to do as the Minister
of Finance is to create a conducive environment for trustees
to make that decision if they think the fund is capable of
doing so.
IsiXhosa:
Bangathi uMphathiswa wezeziMali wathi masikhuphe imali, ngoku
sixakene nento. Hayi ndingaphandle ngebheyile.[Kwahlekwa.]
English:


 
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Your trustees must make the decision. I will make the law
which will make it possible for the trustees to make the
decision. Not me; uh-uh.
Consultations are proceeding following the release of the
discussion paper last year and the draft legislation on these
amendments will be published for comment in the middle of the
year.
CONCLUSION
In conclusion, I would like to reiterate our commitment to the
reconstruction and recovery of our economy, to saving lives
and restoring livelihoods and to securing the long-term
prosperity of our nation.
It is often said, and I believe that this applies to the
circumstances under which we deliver this Budget: “You won't
realise the distance you have walked, until you look around
and realise how far you have been.”
We have been on this journey for a long time. And we still
have a long distance to walk before reaching our goal.


 
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Madam Speaker, I take this opportunity to thank the President
and Deputy President for their leadership and guidance ...
IsiXhosa:
... hayi undikhokele Mongameli, siyabulela.
English:
I also want to thank Deputy Minister Dr David Masondo for his
support.
The Treasury team, led by Director-General Dondo Mogajane,
who’s finishing 23 years this year ... [Applause.] ...
continues to undertake their task and I express my thanks to
them.
My sincere gratitude also goes to the Commissioner of the SA
Revenue Service Edward Kieswetter and the hard-working team at
Sars. [Applause.]
Many thanks go to the Governor of the SA Reserve Bank Mr
Lesetja Kganyago and the staff of the Bank. [Applause.]


 
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Let me also thank my colleagues in the Ministers’ Committee on
the Budget and in the Budget Council, and the MECs’ of Finance
from various provinces, who have shared the load of the tough
decisions that have to be made in the current climate.
Similarly, the Parliamentary Committees of Finance and
Appropriations, I express my sincere appreciation – even when
I mess up they always call me and bring me up to speed.
Finally, we pay tribute to the millions of South Africans,
whose resilience and courage during these times of the
pandemic and economic hardship are an inspiration to all of
us.
IsiXhosa:
Hayi, andikwazi ukungalubuleli usapho lwam nenkosikazi yam le
indinxibise kakuhle kangaka, ndingaba ndiyamosha. [Kwahlekwa]
[Uwele-wele.] Mandibulele kwinkosikazi yam uMamTshawe, hayi
mfondini ...
English;
... I look nice. With those few words, Madam Speaker,


 
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IsiXhosa:
... le kaTyhal’ibhongo intwana iyayishiya indawo.
English:
Thank you very much. [Applause.]
The SPEAKER: I thank the hon Minister. [Interjections.]
Mr N F SHIVAMBU: Speaker ...
The SPEAKER: Yes, hon member.
Mr N F SHIVAMBU: I don’t know whether I must stand up or speak
sitting down. The standard practice is that when a Minister of
Finance finishes the Budget Speech, he must introduce the
Bills, which must be deliberated upon, and then refer them to
the committee. He did not do so. [Interjections.] He has not
done so, so he is amateurish. He must go back and table the
Bills. He must go and table the Bills there. We didn’t hear
him. [Interjections.]


 
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The SPEAKER: Order! Take your seat, hon Mantashe. Take your
seat. Take your seat, please. Thank you very much. Hon
Shivambu, you may have missed this. Right at the beginning of
his speech, the hon Minister did table the documents.
Mr N F SHIVAMBU: He must do it again. [Interjections.]
The SPEAKER: I wish to protect him now.
Thank you very much, hon members. The papers tabled by the
Minister will be referred to the relevant committee. That
concludes the business for the day. [Applause.]
The House adjourned at 14:55.


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