I listened to the first part of Mr Gordhan’s speech on the radio yesterday. And of everything that was said, this is the part that I keep coming back to:

An additional R16 billion is allocated to higher education over the next three years, funded through reprioritisation of expenditure plans.

So that was the script. But then Mr Gordhan did some ad-libbing and jovially pointed out that Minister of Higher Education, Blade Nzimande, was “smiling” for the first time since the speech had begun.

And sure, perhaps it was intended to mean a “smile of relief” in the face of all the student protests. But it came across as though the Minister of Higher Education was being given a treat.

That said, I’m no doubt falling into a stereotype, and it probably meant nothing. Just some comic humour to lighten up the seriousness of the Budget, and the more dismal parts about lower growth prospects and belt-tightening.

But for my money, let’s hope that the ratings agencies will pay more attention to the numbers, and not spend too much time reading into off-script comments.

The Numbers

So I’ve spent some time with the 2016 Budget spreadsheets (you can find them here), and I’ve made some graphs.

Income taxpayers:

Screen Shot 2016-02-25 at 8.16.01 AM

The breakdown of income tax:

Screen Shot 2016-02-25 at 8.19.16 AM

There are about 927,000 of those “The Rich” income taxpayers. That’s the top 1.75% of the population. And if you earn more than R1.5 million a year, then there are only 95,000 of you, which is roughly the top 0.1%.

Here are all of the 2016/2017 planned tax collections:

Screen Shot 2016-02-25 at 8.24.31 AM

And on that note, I’m going to lift the some points from the “How SA Non-Income Taxes are paid” post:

  • Company Taxes and Dividend Taxes are taxes on shareholders. Those shareholders…tend to be people that already pay income tax. And they’re almost entirely the people in the top decile.
  • The same goes for Property and Estate taxes. Those are paid by the wealthy (you have to be worth more than R3.5 million on your death before you become liable for estate duty, or you have to be buying a home for more than R750,000 before you become liable for even the first cent of transfer duty).
  • Customs and Import Duties are mostly passed on to customers through higher prices. And (I guess) those would be distributed similar to any VAT distribution, because it’s an indirect tax on spending…
  • That leaves us with VAT, the Fuel Levy, and Excise duties. That is: the indirect taxes.
  • Of those indirect taxes, VAT and the Fuel Levy are tax neutral, in that everyone pays a similar percentage of their income toward the tax.
  • Excise Duties tend to be regressive, in that the poor pay proportionally more of their income toward them.
  • But this regressiveness is mostly offset by social grants.

In the new budget, here are the changes that are planned:

  • Individual income taxpayers will get some relief with the increases in rebates and medical tax credits.
  • But not if you’ve made capital gains – because most of the income tax relief will be offset by increases in capital gains tax (from 13.7% to 16.4% for individuals, and from 18.6% to 22.4% for companies).
  • Transfer duties on properties worth more than R10 million are also going up.
  • But by far the bulk of the tax increases are coming from the higher fuel levy, and increases in excise duties (also, this sugar tax).

So to be fair, everyone will be bearing the pain. Although, in even more fairness, the social grants are going up (and these should more than offset the extra tax that the poor might pay).

Here’s how the money will be spent:

Screen Shot 2016-02-25 at 8.25.21 AM

But that’s just on departments. If I was to reconstitute that into the “economic” classifications:

Screen Shot 2016-02-25 at 11.59.25 AM

And really, I just want to voice some concern around the public sector wage bill. We’re planning on reducing it: mostly by not replacing people when they leave.

I’m not sure an organisation exists that can function efficiently if it says to its employees “Look, we won’t fire you if you’re deadwood. We just won’t replace you when you leave.”

But perhaps that’s just me.

Rolling Alpha posts about finance, economics, and sometimes stuff that is only quite loosely related. Follow me on Twitter @RollingAlpha, or like my page on Facebook at www.facebook.com/rollingalpha. Or both.