By Khulile Thwala and Sifiso Sibandze
The South African Minister of Finance Enoch Godongwane has delivered a budget speech with no increases in consumer taxes, which South Africans have applauded.
From all appearances, Godongwane’s budget speech was not divorced from reality and it shows that he is much alive to the difficult situation consumers are faced with, from the high cost of living crisis exacerbated by the ever-increasing consumer inflation and fuel prices.
Read More:Â Budget Speech set for next week
To alleviate the burden on consumers, Godongwane did not announce any consumption tax. Consumer taxes include but are not limited to Value Added Tax (VAT), Fuel Levy and Road Accident Fund Levy, which he said would not be increased in the 2023/24 financial year.
Godongwane also announced an increase of the old age and disability grants by E90 on April 1, 2023, and a further E10 on October 1, 2023. The result is a total increase to E2090.
The child support grant was increased from E480 to E510 on October 1, 2023, while the foster care grant increases from E1 070 to E1 130 over the same period.
Alcohol imbibers and smokers to pay more for their ‘Sins’
Godongwana announced an increase in the excise duties on alcohol and tobacco of 4.9 per cent, in line with expected inflation. He categorically stated that alcohol imbibers and smokers will not get any reprieve as
he announced the increase in excise duties.
This means that the duty on:
• A 340-millilitre can of beer increases by 10 cents,
• A 750-millilitre bottle of wine goes up by 18 cents,
• A 750-millilitre bottle of spirits will increase by E3.90,
• A 23-gram cigar by E5.47,
• And on a pack of 20 cigarettes, the duty rises 98 cents.
The minister further announced the upward adjustment of the personal income tax by inflation, which will increase the tax-free threshold from E91 250 to E95 750.
He also said medical tax credits will also be increased by inflation, to E364 per month for the first two members, and to E246 per month for additional members.
Regarding the retirement tax tables lump sums withdrawn before retirement, and lump sums that would be withdrawn at retirement, he said they will be adjusted upwards by 10 per cent. This means that the tax-free amount that can be withdrawn at retirement increases to E550 000.
Positives from Enoch Godongwane’s Budget Speech
As the Minister of Finance, Neal Rijkenberg is yet to deliver Eswatini National Budget on Friday, there are some positives he can draw from his South African counterpart and replicate.
Notably, Godongwane delivered a budget speech that is not divorced from reality on the ground. He arguably delivered a budget that will to a certain extent, address the pressing challenges faced by South Africans ranging from the high cost of living and high energy prices to high food prices.
Here are some of the positives from Godongwane which is worth replicating by our own Rijkenberg;
The positives worth emulating
1. No major tax increase proposals
2. No increase in consumer taxes (fuel levy, VAT, and the Road Accident Fund levy)
3. Tax relief for the sugar industry to protect job losses and assist industry players
4. Increasing investment in infrastructure for the creation of jobs (spending on buildings such as roads and dams – will increase from E62 billion in the current year to R104.2 billion in 2025/26.)
5. Increase of social grants (child support grant rises from E480 to E510 on October 1, 2023, foster care grant increases from E1070 to E1 130 over the same period.)
6. Increase allocations to health and basic education
