In his maiden budget speech, Minister of Finance, Enoch Godongwana, emphasised the need for a critical balance between saving lives and livelihoods, whilst supporting inclusive growth.
Much was made of supporting economic structure and recovery – the rebuilding of the South African economy through accelerated infrastructure development, SMME support and by allowing both individuals and businesses to strengthen their financial foundations through various rebates, tax levies and incentives, many of which remained unchanged.
“Now is not the time to increase taxes and put the recovery at risk!” he said.
Take-aways for tax payers
- Tax relief through the adjustment of personal income tax brackets and rebates in line with inflation at 4.5%. (a welcome relief)
- Reduction in company income tax rates to 27% for tax years ending on or after 31 March 2023. (every little bit counts)
- No changes to the general fuel levy but the structuring of more sustainable price increases is under review. (not if the last increase was anything to go by, you will no doubt be thinking)
- Plastic bag levy is decreased by 3 cents to 28 cents per bag from 1 April 2022. (buying recycled bags and remembering to take them to the till is still a better buy)
- Increases of between 4.5% and 6.5% in excise duties on alcohol and tobacco and a proposal on a new tax for vaping products is under consideration. (nothing to be done about that bar cutting back),
- The exemption of foreign remuneration earned by South African tax residents remains unchanged.
The bigger picture
- Real GDP is expected to grow at 2.1 % in 2022 and an average of 1.8 % over the medium term.
- 33 trillion will be allocated over the next three years to the social wage to support vulnerable and low-income households.
- The allocation of R32.6 billion for financial support to current bursary holders and first-year students under the National Student Financial Aid Scheme.
- An increase to the monthly benefits for employers under the employment tax incentive of 50%.
- Bounce-back schemes to support SMEs and businesses in distress through loan guarantees and equity-linked loan support mechanisms.
- Over the medium-term, R76 billion is allocated for job creation programmes.
Whilst some effort has been made to “keep money in the pockets of South Africans” there are still some taxing times ahead and a long road to recovery, but with some careful tax planning a little will go a long way to making some savings and addressing your bottom line come the next financial year end.