All of us in our capacity know how important using money wisely is. The same applies to the nation, it is important to have a budget in place to ensure that funds are used wisely for the improvement of our economy.
Below we will give a summary of some of the things that the Finance Minister Enoch Godongwana addressed in the budget speech delivered on February 23.
Highlights of the budget framework were set out as follows:
- The global economy was expected to grow by 4.9% in last year’s mid-term budget speech, and it is now expected to grow by 4.4%.
- Factors like Covid restrictions, the July unrest, the slowing down of the commodity prices, and other global developments contributed to the projected economic growth in South Africa being reduced to 4.8%, from the 5.1% projected in last year’s mid-term budget speech.
- The estimated tax revenue collection for 2021/2022 is R1.55 trillion, which is R182 billion more than last year’s estimate. This is mostly from the mining sector, personal income tax, and value-added tax.
- Government debt is projected to rise to R5.4 trillion over the mid-term, from R4.3 trillion.
- The current budget deficit is 5.7% of GDP and is expected to decrease to 4.2% of GDP by 2024/2025, therefore stabilising government debt and giving hope to expect a budget surplus by 2023/2024.
- R5 billion will be set aside for the Medium-Term Expenditure Framework (MTEF) infrastructure projects.
- R76 billion will be allocated to job creation programs, of which an additional R18.4 billion will be allocated to the Presidential employment initiative.
- A R5.2 billion tax relief is proposed to help boost the economy, fund incentives for youth development, and reduce the need for fuel levy and Road Accident Fund levy increases. This relief will mostly be funded by adjusting the rebates.
- Rebates will be adjusted in line with inflation, meaning the annual tax-free limit for people under sixty-five increases from R87 300 to R91 250.
- Excise duties on tobacco and alcohol will see an increase of between 4.5%-6.5%.
- The health promotion levy will go up to 2.31 cents per gram of sugar.
- Corporate income tax will be reduced to 27% from 28%. This will apply to companies with a year-end of 31 March 2023.
- Regulation 28 of the Pension Funds Act will be amended to include more investments in infrastructure.
In closing, not much will change, apart from the minor changes in sin tax, and as Godongwana said “You won’t realise the distance you walked until you look around and realise how far you have been”. As a nation, we still have a long way to go.