Tough times ahead with a tight 2021/2022 budget announced
If there was any doubt that South Africa is in the midst of really challenging economic times, then Minister of Finance Tito Mboweni’s Budget Speech left no question: tough times lie ahead for employers and employees.
But that is why a service provider like CRS Technologies adds value. We are here to help our clients make it through the economic storm. And the more information made available, the more empowered people are to navigate the challenges.
So we’ve summarised the most salient points of the speech:
- Budget deficit has been revised to 14% of GDP in 2020/2021.
- Gross debt has increased from 65.6% to 80.3% of GDP.
- The 2021 Budget proposes measures to narrow the main budget primary deficit from 7.5% of GDP to 0.8% in 2023/2024.
- The proposed fiscal framework will stabilise debt at 88.9% of GDP in 2025/2026.
- Over the medium term, debt service costs are expected to average 20.9% of gross tax revenue.
- The global and domestic recovery remains highly uncertain, while spending pressures from state-owned companies continue to exert upward pressure on the expenditure ceiling. During 2021 a new round of public-service wage negotiations will take place.
- Government will roll out a free mass COVID-19 vaccination campaign, for which R9 billion has been allocated.
Of course, there are significant implications from a tax revenue point of view. The below is the most important to be aware of:
- Government will not raise any additional tax revenue in this budget.
- Personal income tax brackets and rebates will increase above the inflation rate of 4%.
- The UIF contribution ceiling will be set at R17 711.58 per month with effect from 1 March 2021.
- The general fuel levy will increase by 15 cents per litre and the Road Accident Fund levy will increase by 11 cents with effect from 7 April 2021.
- An 8% increase will be levied on excise duties for alcohol and tobacco products.
As always, our legislation team is on stand-by to assist you with any questions or advice. Please contact them at firstname.lastname@example.org