Mar 2006

Budget 2006

Tlala o kotsing. These Sesotho words loosely translate as “hunger you are in trouble”. They were repeatedly used by Finance Minister Trevor Manuel during his  Budget Speech.

Social services
Manuel could not have chosen better words. His Budget was welcomed by almost all South Africans from different sectors of life. It is viewed as good news for the hungry and the poor.  Education, social grants, small business, municipal service delivery, skills development and health are among the sectors that will get more money.

Small business
With the current budget, it is also a good time to start a small business, and maybe time to stop or cut down on drinking alcohol and smoking. Small businesses that make a profit of R40 000 a year and individuals earning the same amount of money a year, will no longer pay tax. Businesses making R300 000 a year will only pay 10 per cent tax. Last year it was R200 000.

Smokers pay more
Smokers will now have to pay 52 cents more on a packet of cigarettes, while drinkers will pay 5 cents more on a 340ml can of beer, 13 cents more on a 750ml bottle of wine and R1,54 cents more on a 750ml bottle of spirits. However, Manuel put more smiles on the faces of those receiving social grants. From April 1 this year, disability and care dependency grants will be increased by R40 to R820 a month. The foster care grant will increase by R30 to R590 and child support grant by R10 to R190 a month. Over the next three years, government will use R33 billion for 2010 World Cup infrastructure like stadiums, the Gautrain Rapid Rail Link and local and national roads.

Less tax
It is also now cheaper to buy a house. When buying a house costing under R500 000, there will be no transfer duty cost – that is the money you pay to register the house in your name. Generally, all South Africans will pay less tax. R13,5 billion has been set aside to cut individual income tax. The economy is currently growing at 5 per cent a year, contributing to job creation.  Quoting from a letter he had received from a member of the public, Manuel read: “This is the year of plenty when all South Africans will reap the fruits of economic growth.”

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