Finance Minister Mboweni gave South Africans an update on the state of South Africa’s finances and what the country can afford to support the pillars of growth in South Africa. The Minister had a challenging role as he explained the difficulties in the economy. He noted that the budget needs to assist to achieve a higher growth rate, increase tax collection, spend money reasonably, stabilise and reduce debt, reconfigure the state owned enterprises and manage the public sector wage bill. Treasury expects revenues or earnings of R1.58 trillion and expects to spend R1.83 billion. Put another way, the country will spend more than it earns, creating what is known as a budget deficit.
Below are some of the give and takes that may impact your lives.
- Income tax, corporate tax and VAT have not been increased.
- Excise taxes, commonly known as Sin taxes will increase across the range of cigarettes, beer, whiskey and wine. Sorghum beer will however not be impacted by a tax increase. Sugar tax will also increase meaning you will pay more for your sugary drinks, cakes, sweets and biscuits.
- Fuel levies will increase by 29 cents per litre for petrol and 30 cents per litre for diesel. This will hit motorists hard next month and you will pay more to travel if using your own transport or public transport. We suggest that you consider this increase in your monthly budget and perhaps carpool to save on fuel costs.
- The public wage bill needs to shrink by R27 billion over the next three years. The first step is to allow older public servants, who wish to do so, to retire early. In time this will be complemented by limits on overtime and bonus payments. Members of Parliament and provincial legislatures and executives at public entities will not receive any salary increases this financial year.
- Allocations of R1.2 trillion will be made of for learning and culture, R717 billion for health services and nearly R900 billion for social development, like RDP housing. This is great news for previously disadvantaged areas.
- Job creation: Treasury has located R19.8 billion for industrial business incentives. R600 million has gone to the clothing and textile competitiveness programme. This will support 35 500 existing jobs and create about 25 000 new jobs over the next three years. R481.6 million will be allocated to the Small Enterprise Development Agency to expand small business incubation programmes. This is great news if you are an entrepreneur, but it remains to be seen how easily SMMEs will be able to access this money.
- Education: R30 billion will be allocated to build new schools and maintain the schooling infrastructure. A further R2.8 billion is added to the School Infrastructure Backlogs grant to replace pit latrines at over 2 400 schools. The minister appealed to parents to play a constructive role in the education of their children. This also means that it is important for parents to prioritise saving to better meet the educational requirements of their children.
- Emerging farmers: R3.7 billion is set aside to assist emerging farmers seeking to acquire land to farm.
- Data costs must fall! The minister will shortly issue policy direction to ICASA to reduce data costs for all South Africans. This announcement will relieve some of the stress faced by entrepreneurs, by bringing down the cost of doing business.
- Higher education: R111.2 billion over the medium term will assist 2.8 million deserving students from poor and working class families to obtain their qualifications at universities and TVET colleges.
- Social grant payments: Government has allocated R567 billion for social grants. That means that pensioners, disability grants and war veterans grants and care dependency grants will increase by R80. Foster care will increase by R40 to R1 000 and child support grant will increase to R420 in April and R430 in October.
- New doctors and nurses are needed. R2.8 billion has been reprioritised to a new human resources grant and R1 billion for medical interns. Health care workers wages have increased to R 3 500.
- Malaria: Government has allocated R319 million to eliminate malaria in SA, which will hopefully reduce the incidents and numbers of deaths caused of Malaria.
- Housing: Government has allocated R14.7 billion to support people to own their own homes and upgrade their access to basic amenities. The Help to Buy subsidy of R950 million over three years, will assist first time buyers to purchase a home.
- Infrastructure: The South African Roads Agency has allocated R3.5 billion to improve non toll roads over the next years.
The national budget is a financial plan that applies to all South Africans. On a personal level, you should consider you own personal budget. Comparing what your income is versus what you spend every month is a good start. Make sure that you are not overspending and becoming over indebted. Your finances may be stretched, but tightening your belt and trying to save a little each month are habits you simply can't afford to neglect.