1 / 96

Authorised Financial Services Provider – FSP No: 859

Authorised Financial Services Provider – FSP No: 859. 2009 Pre-Budget Presentation: “ It’s Just a Jump to the Left”. Presented by: Dawie Roodt 4 February 2009. “It’s Just a Jump to the Left”. How your Tax Money is being spent ? Can the State afford the ANC Manifesto’s bill?.

latoya
Download Presentation

Authorised Financial Services Provider – FSP No: 859

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Authorised Financial Services Provider – FSP No: 859

  2. 2009 Pre-Budget Presentation:“It’s Just a Jump to the Left” Presented by: Dawie Roodt 4 February 2009

  3. “It’s Just a Jump to the Left” • How your Tax Money is being spent? • Can the State afford the ANC Manifesto’s bill?

  4. Basic Economic System Production =100 Consumption = 100

  5. Economic Growth

  6. Year 1: Investment = 20 Production =100 Consumption = 80

  7. Year 2: Eco. Growth = 5.0% Investment = 22 Production = 105 + 2 Consumption = 83 + 3

  8. Economic Growth

  9. Things Certain in Life:Death & TAXES

  10. Year 1: - 5 Investment = 15 Production= 100 Taxes = 30 Consumption= 55 - 25

  11. Scenario 1: All Taxes are Invested Investment=15 = 45 Production= 100 + 30 Taxes = 30 Consumption= 55

  12. Year 2: Eco. Growth = 10.0% Investment=18 Production = 110 + 3 Taxes = 30 Consumption= 62 + 7

  13. Economic Growth Scenario 1

  14. Scenario 2: All Taxes go to Expenditure Investment=15 = 25 Production = 100 + 10 Taxes = 30 + 30 Consumption= 55 + 20 = 75

  15. Year 2: Eco. Growth = 7.0% Investment=17 Production= 107 + 2 Taxes =30 Consumption= 60 + 5

  16. Economic Growth Scenario 1 Scenario 2

  17. Scenario 3: Efficiency Loss Investment=15 Production= 100 + 7 = 22 Taxes = 30 !Efficiency Loss! + 30 + 25 Consumption= 55 + 18 = 73

  18. Year 2: Eco. Growth = 6.0% Investment = 17. Production= 106.0 + 2 Taxes =30 Consumption= 59 + 4

  19. Economic Growth Scenario 1 Scenario 2 Scenario 3

  20. Year 2: Eco. Growth = 6.0% Investment= 17 Production = 106.0 • Consumption > Production • CA Deficit • Currency Volatility • Pressure on Prices, i.e. Inflation • Upward Pressure on Interest Rates Taxes = 30 Consumption = 59 Want80as before !! !!! =127 =106

  21. Adverse Impacts…

  22. Undermining the Economy EXTERNALLY INTERNALLYThe State Takes from Savers – Gives to Spenders CA Deficit Interest % Savings Inflation Rand

  23. In Reality….. Source: SARB, Efficient Research 2008

  24. But in Reality… SCRAPPED ??

  25. What if Company Tax Scrapped? R 2020 bn 5.1% + 0.9% = 6.0% 6 yrs R537bn R422bn + 0.63*R137bn = R422bn + R87.5bn= R509.5bn

  26. Therefore, Needed • Higher Savings: • Lower Corporate Taxes • Lower Personal Income Taxes • Less Social Expenditure: • 12m+ Grants Recipients • Education Results ?? • Focus on State Efficiency • More Focus on Capital Expenditure/ Productive Capacity

  27. Treasury’s Playground:2008/09

  28. Comparing Apples with Apples…2008/09 (Budget) SA Reserve Bank National Treasury Main Budget Revenue 625,4 Expenditure 611,1 Balance 14,3 + Social Security Revenue 24,7 Expenditure 20,5 = Consolidated National Budget Balance 18,5 National Government Finance Revenue 625,4 Expenditure 611,1 Balance 14,3 + Social Security = Consolidated Central Government + provincial + local government = Consolidated General Government + public enterprises = Non-financial public sector? 0.6% of GDP 0.8% of GDP

  29. Three Spheres for Revenue Provincial Motor vehicle licenses Casino (gambling) taxes Liquor licenses Fuel levy? Local Property rates RSC levies (prior to 06/07) National PIT, CIT, VAT, Fuel levy Source: 2008 Tax Statistics,National Treasury and SARS

  30. Revenue

  31. Revenue

  32. Revenue Categories Strong Demand Economic Activity,Commodity Cycle Wage Increases,Inflation… 12.0%

  33. National Tax Revenues

  34. Registered Income Tax Payers 75% Total CIT paid by 1.2% companies 45% Total PITpaid by top 5.0% Source: National Treasury & SARS, 2008, business Day 3 Feb 08

  35. 2008/09 in Review:Revenue

  36. Reasons for Under Shooting • Individual tax • High wage and salary negotiations (wage inflation) • Company tax • Commodity prices (“Two halves” of 2008 – commodity boom/bust) • STC • Retained income • VAT • Consumption expenditure plummets

  37. Total Budget Revenue • Interest • Dividends • Rent on land • Sales of good and services • Fines and penalties • Botswana, Lesotho, Namibia, Swaziland (BLNS) • Similar excise and customs (import) duties • Revenues pooled and distributed based on formula Source: 2008 Tax Statistics,National Treasury and SARS

  38. SA Contributions to and received from SACU Pool Source: 2008 Tax Statistics,National Treasury and SARS

  39. SACU Revenue Share Formula • Customs component • Country’s share of intra-SACU trade, including re-exports • Excise component • Based on GDP, net of development component • Development component • Set at 15% of total excise pool • GDP p.c. vs average SACU GDP p.c. • GDP < SACU average: compensated Source: 2008 Tax Statistics,National Treasury and SARS

  40. SACU Economic Indicators Source: 2008 Tax Statistics, IMF, own calculations *Calculated using average R/$7.05

  41. Expenditure “Budget priorities for the period ahead are focused on social solidarity and building a more equitable society” (Source: 2008 MTBPS)

  42. Expenditure Rein in Expenditure Lower foreign debt

  43. Spending Priorities

  44. Social Expenditure Source: Various budgets, own calculations

  45. 2008/09 in Review:Expenditure * Includes: Provincial and local government

  46. Balance/Debt

  47. Revenue and Expenditure

  48. Fiscal Balance Source: SARB Forecast: Efficient Group

  49. State Debt Domestic debt: R485.5bn Foreign debt: R81.9bn Source: SARB Forecast: MTBPS, Efficient

  50. The Grey Area- Applying Monetary Policy the Fiscal Way! ‘Loss’ paid by State to SARB: Interest received = 3% Interest Paid = 8% “Cost” = R3bn Liquidity drainage Source: SARB, Treasury

More Related