Following the delivery of Finance Minister Enoch Godongwana’s 2022 National Budget Speech this week, please find below commentary from Sebastien Alexanderson, CEO of National Debt Advisors on how the national budget will affect the pockets of South African consumers.
Key takeouts from the Budget Speech that will affect consumers:
Personal income tax brackets and rebates will be adjusted downwards by 4.5% in an effort to neutralise the impact of inflation, pushing taxpayers into higher brackets.
As a result of these adjustments, the level where income tax now becomes payable, increases to R91,259 per annum (R7,679pm).
Sin tax will increase once more, delivering an estimated R400m more from alcohol and R100m via tobacco duties.
The levy on plastic bags is raised from 25c to 28c and the incandescent light bulb levy will rise from R10 to R15 for each globe from 1 April 2022.
On a positive note, there will be no increase in either the general fuel levy or the Road Accident Fund levy.
Excise duties on alcohol and tobacco will increase by between 4.5 and 6.5 percent. The increases mean that as from today:
A 340ml can of beer or cider will cost 11c more;
A 750ml bottle of wine will be 17c more expensive;
A bottle of sparkling wine will cost an additional 76c;
And a bottle of spirits will be R4.83 more expensive;
A packet of cigarettes will cost an additional R1.03;
25 grams of piped tobacco will cost an extra 37c; and
A 23 gram cigar will be R6.77 more expensive.
Government also proposes to introduce a new tax on vaping products of at least R2.90 per milliliter from 1 January 2023.
A new tax will also be introduced on beer powders.
After three years of no changes, the health promotion levy will be increased to 2.31 cents per gram of sugar.
What does this mean for consumers and debt (incl. tax changes impacting man on the street, retirement savings)?
The price of everything is going up. Energy, imports, raw goods, staple items are all about to feel the crunch. Hyperinflation has made its way across ocean to our shores, and we can see it at the petrol stations and feel it in our grocery carts. The economy is struggling to kickstart, but it’s on a slow upward trend. This will take us some time and belt tightening to adjust to as we try to normalise again.
What are the implications on increase in sugar taxes / sin taxes?
Want to take the strain off an already overworked or strained health care system? Tax the items that send us to the hospital sooner in order to make them more expensive. Sadly, all too often it’s our back pocket that dictates our indulging ways and often puts the ‘fun now’ in place of the ‘pay later’, with our health just like with many of our purchases.
What are the options and advice South Africans that are struggling with debt?
For the many people who have hit rock bottom but are now starting to find employment and want to improve their lives, their credit and their sleep by dealing with their finances – it’s time to speak to a debt counsellor.
Those who are on the fence or teetering to the other side, it’s also time to investigate your options – as well as your rights – in the case that you do start to miss payments or start using debt to service the minimum payments or just to stay afloat.