Finance Minister Enoch Godongwana’s maiden budget speech was sober and pragmatic. The consolidated budget deficit is narrowing to 5,7% of GDP and the country’s debt ratio will stabilise at 75%, which is an improvement on the 2021 forecasts. Tax revenue collection at R1,55 trillion represents an improvement of R182 billion over last year’s estimates.
Treasury’s improved fiscal position, due in part to commodities windfall taxes, provided a modicum of breathing space for individuals and companies. In welcome developments, the budget provided tax relief amounting to R5,2 billion, with a 4,5% adjustments to in personal income tax brackets, a reduction in corporate tax from 28% to 27% and no increase to the fuel levy.
Importantly for clients and investors, the Minister confirmed looming changes to retirement funds and those relating to Regulation 28 of the Pension Fund Act to allow for greater preservation and partial access to retirement funds through a ‘two-pot’ system.
We remain fully engaged with these developments and expect draft legislation in his regard to be published later this year.
A synopsis of the 2022 budget is attached. Please do not hesitate to contact us should you have any questions or queries regarding the 2022 budget.