LAst week, Minister Enoch Godongwana delivered his first Budget Speech. He was faced with an exceptionally difficult challenge considering that the national economy is still struggling to recover from the effects of Covid-19, and the resulting economic recession. Here are the highlights:
Sin Tax Increases
Covid-19
An additional R110.8 billion has been allocated to fund the special Covid-19 social relief of distress grant for the next 12 months, bringing the total to R44 billion.
Social Grants
Some good news
Education and culture will receive the largest share of the government budget (24%), with the bulk of the spending going towards basic education.
A freeze has been implemented on the fuel tax levy for the first time since 1990.
Individual taxpayers receive a R13.5billion break through an adjustment of personal tax brackets in line with inflation.
Retirement fund regulations
National Treasury will publish draft legislation regarding its long-awaited ‘two-pot’ system later this year, which aims to give people in financial distress access to a portion of their pensions before they retire. The government is still busy with the restructuring that is necessary before this can be implemented, and all funds with have the final say before permission is granted.
In March, changes to Regulation 28, which sets out where retirement funds may invest, will also be published. The changes will allow funds to invest up to 45% (previously 40%) of their capital offshore (this includes the 10% allowance for other African countries); as well as investment in infrastructure.
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ENDS
