Gordhan talks property leases, infrastructure and taxes in 2014 Budget Speech

Posted On Wednesday, 26 February 2014 19:10 Published by
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Minister of Finance, Pravin Gordhan delivers 2014 Budget weighing in on government property leases.

Pravin Gordhan

"This budget allocates R6.5 billion over three years to support small and medium enterprises," Finance Minister Pravin Gordhan said.

Minister Gordhan said he had accepted two recommendations from the Judge Davis tax committee aimed at easing the compliance burden of small businesses.

"The turnover tax regime will be amended to further reduce the tax burden on micro-enterprises.

"Consideration is being given to replacing the graduated tax structure for small business corporations with a refundable tax compliance credit.

"Amendments will be made to the venture capital company tax regime, and the rules related to access foreign capital will be eased to enhance support for entrepreneurial development," he said.

Property Leases

Mister Speaker, I referred in 2012 to an initiative to be undertaken jointly with Minister Nxesi and his department to review the validity and cost effectiveness of all government property leases.

The exercise has exposed several deficiencies:

  • Accommodation that is unoccupied but being paid for;
  • Accommodation occupied by non-governmental entities;
  • Discrepancies between the size of accommodation occupied and what is paid for;
  • Marked divergences from market rates per square metre;
  • Procurement through inappropriate non-competitive procedures;
  • Missing or invalid lease agreements and unsubstantiated payments to landlords.

The intervention also identified a backlog of more than half of the lease portfolio reviewed. As a result of this initiative, DPW now has a turnaround strategy that will enable it to regularise the lease portfolio, while ensuring continuity of services to client departments.

Investment in infrastructure

Minister Gordhan said the National Development Plan required government to invest in infrastructure to achieve social and economic transformation.

This, he said, was aimed at ensuring that the economy grows at levels of 5% per year to create jobs and reduce poverty quicker.

He said R847 billion would be spent on infrastructure over the next three years.

Minister Gordhan said investment in the electricity and transport infrastructure was key. He noted that the first unit of the Medupi power station is expected to be completed towards the end of the year.

"The Passenger Rail Agency of South Africa refurbished 500 Metrorail coaches last year, and its new rolling stock procurement programme will get underway this year," he said.

He said expenditure on social infrastructure – which includes health, education and community facilities - will increase from R30 billion to R43 billion over the next three years.

Minister Gordhan said priority would be given to programmes aimed at eradicating school infrastructure backlogs and to refurbish clinics and hospitals.

A plan to rehabilitate 35 dams has been completed, he said.

"In 2014/15, a total of R40 billion in infrastructure grants will be transferred to local governments for their water, sanitation, energy and environmental functions.

"Contracts for 47 renewable energy projects were concluded in 2012 and 2013, many of which are already under construction.

"These will add 2 460 MW of power capacity, and an investment of R70 billion. "A further R45 billion investment will be contracted this year," he said.

Last modified on Thursday, 27 February 2014 07:45

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