In turning to the revenue proposals for the year ahead, Honourable Members, let me emphasise again that we are accountable to citizens and taxpayers for ensuring value for money in our stewardship of public resources.

Our current projection is that tax revenue will amount to R979 billion in 2014/15, about R14.7 billion less than the budget estimate a year ago. Including non-tax revenue, social security funds and other receipts, and after deducting R51.7 billion which goes to Southern African Customs Union partner countries, consolidated budget revenue will be slightly over R1 trillion this year, or about 8.2 per cent more than in 2013/14.

In the recent past, there has been considerable variation in customs union receipts, because of fluctuations in regional trade. The period ahead will also see large shifts in customs receipts, with potentially adverse implications for our partner countries. South Africa remains keen to see a revised and improved revenue sharing arrangement that would stabilise and safeguard these resource flows.

Personal income tax remains a buoyant source of revenue, but the slowdown in business conditions is reflected in lower-than-expected company tax, value added tax and customs revenue.

Tax policy aims to raise revenue in a manner that is fair and efficient, while contributing to social solidarity and supporting long-term economic growth and job creation. Tax reforms since 1994 have considerably broadened the tax base, through inclusion of capital gains and closing of tax loopholes.

As I indicated in the Medium Term Budget Policy Statement in October, even after lowering our expenditure ceiling, and taking into account the need for sustainability in managing our debt, there is a structural gap between our spending needs and the amount of tax we expect collect. To bridge this gap we require additional revenue.

In considering tax policy options, we have drawn on advice of the Davis Tax Committee and through the broader annual tax consultation process. The need to maintain the overall progressivity of the tax structure is a compelling consideration.