Mixed reactions as Finance Minister Godongwana delves into the reserves to help ailing economy

DELIVERING his last 6th administration as minister of Finance Enoch Godongwana, dipped into the reserves to help the economy grow, a move many did not approve.

At R1.73 trillion, tax revenue for 2023/24 R56.1bn lower than estimated in the 2023 financial.

Personal Tax remains unchanged.

Godongwana, according to him, says delving into R150bn reserves is necessitated by various factors that affect the country, such as high unemployment rates, rising living costs, and a tough economic environment.

On SRD Grant increases and extension, the minister said permanent social grants are increased to keep pace with inflation and increase access:

  • An increase of R100 to the old age, war veterans, disability and care dependency grants. This amount will be divided into R90 effective from April, and R10 effective October;
  • A R50 increase to the foster care grant; and
  • A R20 increase to the child support grant.

“We are sensitive to the increase in the cost of living for the nearly 19 million South Africans who rely on these grants to make ends meet.

“In this regard, we have done as much as the fiscal envelope allows. Work is currently underway to improve the COVID-19 Social Relief of Distress Grant by April this year.”

Godongwana furthermore said the National Treasury will work with the Department of Social Development in ensuring that improvements in this grant are captured in the final regulations.

“These improvements will be within the current fiscal framework.

“For the extension of the grant beyond March 2025, the social security policy reforms, together with the funding source, will be finalised.”

The SRD grant, originally introduced in May 2020 to help poor households at the height of the pandemic, has been extended.

For alcohol products excise duties, above-inflation increases of between 6.7 and 7.2 per cent for 2024/25 are proposed. This means:

  • A can of beer increases by 14 cents;
  • A can of a cider and alcoholic fruit beverage goes up by 14 cents;
  • A bottle of wine will cost an extra 28 cents;
  • A bottle of fortified wine will cost an extra 47 cents;
  • A bottle of sparkling wine will cost an extra 89 cents; and
  • A bottle of spirits, including whisky, gin or vodka, increases by R5.53.

“You will be happy to hear then, that we are tabling an increase of the excise duty on electronic nicotine and non-nicotine delivery systems, known as vapes, to R3.04 per millilitre.”

The minister also mentioned there will be increase on tobacco excise duties by 4.7 per cent for cigarettes and cigarette tobacco, and by 8.2 per cent for pipe tobacco and cigars. This translates to:

  • A R9.51 cents increase for cigars;
  • A 97 cents increase to a pack of cigarettes; and
  • An extra 57 cents for a pipe of tobacco.

There were no mention of extra funding for troubled parastatals such as Eskom and Transnet.

Municipalities also received more funding. Police, health, teachers also got bigger budget.

He also indicated party funding and electric car production in the country will be ramped up.

But as you would expect, budget is never meant to please everyone, especially opposition parties and some businesses.

“NHI is impossible” says Busisiwe Mavuso -Business Leadership SA CE, who believes the allocation to health would have tripled to deal with the controversial NHI.

His counterpart Gankie Matabane from Black Business Council, said the budget speech ‘lacked vision’ as it did not reveal much on other serious matters such as rail, and so on.

Wrapping up his address, he borrowed the popular phrase ‘tintswalo’ indicating there more ‘tintswalos’ in his office, much to applause from the initiator of the paraphrase Pres Cyril Matamela Ramaphosa, his deputy Paul Mashatile and other members.

Image (Finance minister Enoch Gondongwana’s Budget Speech focused on delving into the reserves).

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