The Budget Speech dust has settled – but do regular South Africans even care?
What’s in the headlines?
While the 2021 Budget Speech, delivered by Minister of Finance, Tito Mboweni last month once again painted a very clear picture of the economic devastation left by the nationwide lockdown, the Minister was also able to deliver a little bit of good news for consumers.
South African consumers were able to breathe a sigh of relief. The 5% increase in income tax brackets and increase in rebates means that consumers won’t pay more in income taxes – and may even pay a bit less in certain cases. The only real increase in indirect taxes was the 8% increase in excise duties for alcohol and tobacco products.
In the days following the Budget Speech, many financial experts have weighed in with their opinions, but what do regular South Africans make of the Minister’s presentation?
What does South Africa have to say?
Matt Kloos – CFO of CompariSure, states that one disappointing finding in CompariSure’s latest survey, was that 39.67% of respondents were not aware that the Budget Speech was happening, and 16% didn't even know who the current Minister of Finance was. “This is a very important event in the year for any taxpayer and we believe that responsible consumers should be informing themselves about the price increases that they may see in any given year. It is an essential part of responsible budgeting.”
With that said, nearly half of survey respondents actually watched the Minister’s speech when it was airing. “Digging down further into the numbers, we could see that there was about an even split among individuals’ sentiments about the direction of SA's economy - with younger people being more positive than their older counterparts.”
Around 54% of respondents said that they are sceptical or have no confidence in the capabilities of Minister Tito Mboweni to construct a national budget that will indeed work. After looking at the key takeaways, 43% of respondents also opined that the outcomes of the Budget Speech will have little or no impact on their life.
“Interestingly, Treasury did indicate that it expected tax compliance to decrease if any more tax hikes were introduced. On the survey side, we actually saw about 12% of respondents stating that they did not think tax avoidance should be punishable – which certainly gives us an indication of how much public sentiment has soured for taxation,” says Kloos.
Looking on the brightside…
Certainly the most important piece of good news was that consumers would not be paying more in taxes. The slight decrease in corporate taxes to 27% may also help to draw more international businesses to South African shores, which would help considerably with job creation.
It is also heartening to see that even during tough economic times, there were some silver linings. By way of example, 17% of the survey’s respondents were able to buy homes last year because of the drop in interest rates.
“While there are undoubtedly more tough times ahead for South African consumers, it is good to see that the first small glimmers of recovery are on the horizon,” concludes Kloos.