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R500 Billion Stimulus package for SA

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 Ramaphosa announces R500bn economic and social package. Biznews.com  Ramaphosa announces R500bn economic and social package.

 

President Ramaphosa announces additional economic and social relief measures that form part of the national response to COVID-19

April 21, 2020

Staff reporter

Gauteng, South Africa: Tonight President Cyril Ramaphosa announced that there will be a R500 billion stimulus package to deal with the economic impact of COVID-19 during the 35-day lockdown in South Africa.

The following banks have been approached for funding: The World Bank, the New Development Bank, International Monetary Fund and African Development Bank.

Ramaphosa announced a phased approach will be taken to reopen the economy and further said he will address the nation on Thursday to elaborate.

This forms part of the second phase of the President's economic response to the COVID-19 pandemic.

The first phase began in mid-March when we declared the coronavirus pandemic as a national disaster.

This included a broad range of measures to mitigate the worst effects of the pandemic on businesses, on communities and on individuals.

The measures included tax relief, the release of disaster relief funds, emergency procurement, wage support through the UIF and funding to small businesses.

Budget Breakdown

An amount of R20 billion will be directed to addressing our efforts to address the pandemic.

"The nation-wide lockdown has had a negative impact on the revenue of municipalities at a time when the demands on them are increasing.

"Additional funding of R20 billion will therefore be made available to municipalities for the provision of emergency water supply, increased sanitisation of public transport and facilities, and providing food and shelter for the homeless, he said.

A six-month temporary COVID-19 grant of R50 billion has been directed towards relieving the plight of those who are most desperately affected by the coronavirus. This means that child support grant beneficiaries will receive an extra R300 in May and from June to October they will receive an additional R500 each month. All other grant beneficiaries will receive an extra R250 per month for the next six months.

A special Covid-19 Social Relief of Distress grant of R350 a month for the next six months will also be paid to individuals who are currently unemployed and do not receive any other form of social grant or UIF payment.

R100 billion has been set aside for the protection of jobs and to create jobs.

R40 billion has been allocated for income support payments for workers whose employers are not able to pay their wages.

Furthermore, R200 billion loan guarantee scheme will be introduced to help businesses pay salaries, rents and suppliers. Companies with a turnover of less than R300 million a year can apply.

Ramaphosa added the government is also working on additional support measures for vulnerable and affected sectors like the taxi industry.

Tax relief

In addition to existing tax relief measures, he said SA will be introducing a 4-month holiday for companies’ skills development levy contributions, fast-tracking VAT refunds and a 3-month delay for filing and first payment of carbon tax.

"To assist a greater number of businesses, the previous turnover threshold for tax deferrals is being increased to R100 million a year, and the proportion of PAYE payment that can be deferred will be increased to 35 percent.

"Businesses with a turnover of more than R100 million a year can apply directly to SARS on a case-by-case basis for deferrals of their tax payments.

"No penalties for late payments will be applicable if they can show they have been materially negatively impacted in this period," he said.

Taxpayers who donate to the Solidarity Fund will be able to claim up to an additional 10 percent as a deduction from their taxable income.

In total these tax measures should provide at least R70 billion in cash flow relief or direct payments to businesses and individuals, added Ramaphosa.

The Minister of Finance is expected provide further details on the above and other tax-related 

The third phase is the economic strategy which is said to be implemented to drive the recovery of our economy as the country emerges from this pandemic.

"Central to the economic recovery strategy will be the measures we will embark upon to stimulate demand and supply through interventions such as a substantial infrastructure build programme, the speedy implementation of economic reforms, the transformation of our economy and embarking on all other steps that will ignite inclusive economic growth," he added.