Winners and losers in the budget: Covid funds, tax relief, rising govt debt

 

Mboweni delivered the all-important 2020/21 budget in the National Assembly on Wednesday, where he projected that the South African economy is expected to rebound by 3.3 percent this year.

Mboweni had the added pressure of delivering government's priorities for the next financial year amid an already ailing economy.

The Covid-19 pandemic has only added onto the fiscal strain.

Mboweni told members of Parliament that Treasury bent over backwards to cushion the blow for citizens while making sure not to leave government coffers high and dry.

He said government has made more room to accommodate the country’s response to the coronavirus crisis, setting aside a substantial amount of money for vaccine procurement.

“With this framework we provide the budget for South Africa's vaccination campaign. This campaign allows us to emerge from the restrictions to economic activity. We are allocating more than R10 billion for the purchase and delivery of vaccines over the next two years.

“We increase the contingency reserve from R5 billion to R12 billion to make provision for the further purchase of vaccines and to cater for other emergencies.”

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Mboweni’s speech comes a day after the unemployment rate rose to 32.5 percent.

He said billions would be pumped into the country’s employment programmes.

Mboweni added that the budget will reduce the tax burden on lower and middle-income households.

Some taxpayers can breathe a sigh of relief.

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“We agree that tax increases must be kept to a minimum as we stabilise our public finances. We have chosen not to introduce the tax measures initially proposed in the October Medium Term Budget Policy Statement,” Mboweni said.

“The personal income tax brackets will be increased by 5 per cent, which is more than inflation. This will provide R2.2 billion in tax relief.

“This means that if you are earning above the new tax-free threshold of R87 300, you will have at least an extra R756 in your pocket after 1 March 2021.”

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All social assistance grants were also increased – the child support grant increased by R10 to R460 and the old age grant increased by R30 to R1890.

"R6.3 billion is allocated to extend the special Covid-19 social relief of distress grant until the end of April 2021."

But it’s not all good news.

“Fuel levies will be increased by 27 cents per litre, comprising 15 cents per litre for the general fuel levy, 11 cents per litre for the Road Accident Fund levy and 1 cent per litre for the carbon fuel levy. An 8 per cent increase in the excise duties on alcohol and tobacco products,” Mboweni added.