Budget surprises with good news for savers, the elderly

Finance Minister Pravin Gordhan has surprised us by tabling a Budget that provides relief to thousands of middle-class taxpayers, boosts the savings of the elderly and supports small business.

Thanks largely to improved tax collection and increased revenue from exporters (one of the few benefits of the weaker rand) Gordhan has cut his budget-deficit targets for the next three years, which should go a long way towards reassuring international ratings agencies.

On retirement, pensioners will now be able to pocket an additional R185000 tax-free. This should encourage people to save more and will be welcomed by thousands of elderly South Africans who have been battling to make ends meet as food, fuel and electricity costs soar.

Instead of raising personal income tax rates to pay for soaring state expenditure, Gordhan provided some tax relief to the about 346000 taxpayers earning between R500000 and R750000 a year.

In many instances, the saving might not quite compensate for the effects of inflation but it will be welcomed by cash-strapped consumers in that income bracket who will, on average, get an additional R3857 in tax relief this year.

Our finance minister's commitment to helping small businesses and start-ups - Gordhan allocated R6.5-billion over three years to support small and medium enterprises - deserves fulsome praise.

Small businesses are the engine of modern economies and in South Africa should be leading the way in creating desperately needed jobs.

By making all grants received by small and medium enterprises tax-exempt, the Budget will increase funding flows to small businesses.

Gordhan's amending of the turnover tax regime, and replacing the graduated tax structure with a refundable ''tax compliance credit'', will also strengthen the sector.

The Budget is no panacea for the economy's deep structural problems - the politicians, and business and labour, are going to have to sit down and deal with these - but it points an encouraging way forward in extremely trying times.