Budget Speech in a Nutshell

The most recent National Budget Speech, by Finance Minister Enoch Godongwana, addressed important topics and shared a budget that was better than we could have foreseen. When compared to the outlook of the South African Reserve Bank (SARB), some considered it slightly concerning that there was such a positive outlook with regards to our economic growth, in light of what most consider a challenging period financially.

One of the conclusions addressed was that that, in 2022, South Africa’s economy grew by the estimated amount of 2.50%, which was more than the projected 1.9%. From a global fiscal outlook, the International Monetary Fund projects a reduction in growth to 2.90% in 2023, from the estimated 3.4% in 2022.

A welcomed and important highlight in this year’s speech was the announcement of tax incentives for households who choose to have solar panels installed, and businesses who invest in renewable power generation.

As of the 1^st March 2023, individuals who install rooftop solar panels can claim a rebate of 25% of the costs of the panels (up to R15 000). Businesses can also reduce their taxable income by 125%, and there is no threshold on the size of qualifying projects – this incentive from the government aims to encourage the use of renewable power. Eskom remains a pressing matter and another important point in the budget speech was the allocation of R254 billion to Eskom, for the servicing of its colossal R423 million debt.

Considering the financial strain facing consumers in the past few years, it is a relief to hear that there won’t be tax increases, other than adjustments relating to compounding inflation. There also won’t be increases to the general and road accident fuel levies. Godongwana stated that this year’s budget is aligned with lowering the consolidated fiscal deficit, as government debt is at an all-time high. While the sugar tax is minimally affected, the government proposed a 4.69% increase on the excise duties relating to alcohol and cigarettes, to match expected inflation rates.

R66 billion of the budget has been allocated to the Department of Social Development, and the social relief distress grant, born in 2020 from the pandemic, has been extended until March 2024, with an additional R36 billion in place. Other social grants also increased at an average of about 5%, linked to inflation increases. If you’re feeling the strain of financial setbacks and can no longer manage your debt, consider Debt Counselling. This debt relief measure has effectively helped many South Africans to repay their debts in full, while also providing instant financial relief.

The National Budget Speech confirms that the state has the resources needed to motivate economic growth and run important services. It also helps to keep us, as consumers affected by financial fluctuations, informed of the government’s plans and areas of focus. Through this speech, Parliament can hold the government accountable for the way they’ve promise to spend their budget.

In light of difficult financial times, the Budget Speech of 2023 indicates that there are plans in place to restore issues which are contributing to the difficulties consumers are facing daily. While there is hope in sight, not everyone has landed comfortably on their feet after a tough few years. At Debtco Group, we are available to offer over-indebted consumers relief from their financial worries. Contact us today and find out if Debt Review is the best option for you.