Many South Africans waited with bated breath to hear some form of financial relief during Enoch Godongwana’s first Budget Speech as Finance Minister.
Godongwana appeared cautiously optimistic as he shared insights on what represented a positive 'turning of the tide' for our fiscal health. Over the past year, Treasury collected a total of R1.55 trillion in taxes, collecting an additional R182 billion more than was previously budgeted for. This was in stark contrast to the doom and gloom of last year's announcement which anticipated the highest tax deficit on record.
The extra revenue collected will allow South Africa to reduce its borrowings for the first time since 2015 – borrowing R182.5 billion less than previously planned.
Here's a short breakdown of government's plans for 2022/23;
Personal income tax brackets have shifted by 4.5%, in line with inflation. This means that the annual tax-free threshold will increase from R87,300 to R91,250.
Corporate tax will be reduced by 1%, from 28% to 27%. A highly welcomed change that will come into effect in the 2023 Financial Year, with the aim of increasing investment and providing further relief to organisations playing a part in stimulating the economy.
Excise duties on alcohol and tobacco will be kept in line with inflation, somewhere between 4,5% - 6%. This came as somewhat of a surprise, as last year we saw an 8% hike in Sin Tax duties.
Fuel Levies and Road Accident Fund
In an announcement that drew cheers from the assembly, there will be no hike in fuel levies or the Road Accident Fund levy – a first since 1990.
The Top 5 areas for planned government spending from 22/23 to 24/25 will include:
Education & Culture – R1 350 billion
Social Development – R1 004 billion
Debt-service Costs – R1 000 billion
Health Care – R764 billion
Although there is still a long road ahead for our recovering economy, we can take some solace in the fact that the wheels do seem to be turning in the right direction.