We have provided the entire 2023 national budget speech, together with a summary and graphic presentation.
We trust you will find this of interest and value.
Finance Minister, Enoch Godongwana, delivered a somewhat mixed national budget on Wednesday 23 February, but there is some good news.
South Africa has avoided falling off the fiscal cliff, due to higher revenue collection by SARS (R94 billion higher than forecast, partially due to higher revenues from booming resource prices), which contributed to the Minister delivering a main budget primary surplus for the first time since 2008/09. This translates into the budget deficit declining from 4,6% of GDP in 2021/22 to 4,2% this year. Yet the sobering reality is that government’s total debt has now reached R5 trillion and debt servicing costs amount to R1 billion per day.
The biggest gainer from this year’s budget is Eskom, however, with government announcing that with strict conditionalities, it would take on R254 billion of the power utility’s enormous and unsustainable R422 billion debt. This relief to Eskom’s balance sheet is designed to free the crippled power generator to re-engineer its operations within the stated 18-24 month window and place it on a more sustainable footing in the medium term. Nonetheless, the debt has to be paid – ultimately by the taxpayer.
While denying that this was an ‘austerity’ budget, Minister Godongwana announced that government spending would increase by 2,9% for the current year, which is considerably below the current inflation rate of some 7%. Once again, education, social development, community development and health account for the lion’s share of government spending.
On the individual taxpayer front, no new personal taxes were announced and, in fact, individuals should be paying marginally lower taxes in the coming financial year. For example, individuals younger than 65 and earning less than R500,000 a year will pay R4, 721 less in tax, while the annual tax-free threshold for under 65’s is raised to R95, 750. Retirement tax and estates duties have also been adjusted for inflation. Incentives were also introduced for householders installing solar panels, with a 25% rebate (up to R15,000) from personal income tax liability.
While there was no increase in the fuel and Road Accident Fund levies, once again, tobacco and alcohol excise were increased, with the tax on a pack of twenty cigarettes now R20,80 and that on a can of beer rising to R2.17.
A full copy of the budget, together with a summary presentation, is posted on the Warwick Wealth website and please do not hesitate to contact your wealth specialist or financial advisor should you require any further information on how this year’s budget will impact you.