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Little has changed in the circumstances surrounding the expectations and delivery of the Budget Speeches in the past decade or so. There have always been all eyes on the (new) Finance Minister to see if he could pull a rabbit from the hat to change the South African economy around and every time we were left with some hope.

Minister Godongwana has left South Africans with some hope that money taps are slowly being closed on poorly managed state-owned companies like SAA and Eskom. This allows funding to be channelled to improvement of infrastructure, ports, telecommunications, schools, hospitals, and clinics.

The introduction of Bounce-back loans, loans assisting SME’s that are struggling due to the historical COVID-19 restrictions, is promising; however, it is said with some caution. In the UK, where this scheme has been implemented for over a year now, several cases of successful fraudulent applications have been uncovered. Lessons should be learned from these cases and proper controls should be implemented to prevent this from finding echoes in the South African economy.

So, who is gaining something and who is losing? According to an article by Bloomberg:

Winners:

Companies – the tax rate changes from 28% to 27%

Motorists – fuel and RAF levies are not being increased for the first time since 1990.

Middle-income taxpayers – the tax brackets will only adjust by the estimated inflation rate.

Welfare recipients – Pension, Veteran and Disability grants will increase by 5% and the Child Support grants by 4.3%.

Losers:

Civil servants – Earnings increase of only 1.8%

The wealthy – will have to start declaring some specified assets at market value.

Sugar, Alcohol & Tobacco industries – the so-called “sin-taxes” are increased to 4.5% and 6.5%, and vaping products are now included.

 

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