South Africans are facing radical increases in especially daily living costs and housing in a time of increasing unemployment and poverty. But, in reality, Finance Minister Pravin Gordhan’s 2016 Budget Speech held no surprises…
The greatest surprise of the minister’s speech was the fact that income tax rates will not be increased. But, by increasing fuel levy, property transfer tax, and sin taxes (by about 7%) consumers will already be tightening their belts. An amount of R9,5 billion will be raised through increases in excise during, general fuel levy and environmental taxes.
South Africa’s consumers are in dire financial struggles and can’t make their debt repayments. In the beginning of last year, the company launched a survey where we asked participants if they have money left over at the end of the month; 51% indicated they couldn’t make their repayments at the end of the month.
Some good news though is the fact that the cut in government spending and reducing the number of government jobs will be monitored and checked by Treasury.
Hopefully, the government will undergo a long-overdue “spring clean” under the watchful eye of Minister Gordhan. The government will now have to close the gap between spending and revenue by establishing better cooperation with the business sector.
Social grants will be increased and was not specific about higher education grants but social grants will be increased.
The tyre levy (implemented from October this year) and sugar tax (only next year on sweetened beverages) will be introduced.
Some good news though is the minister’s prediction that export growth is expected (by 3% this year). While we are undergoing a tough economic period, there are at least a few silver linings and, as mentioned by the minister when he started his speech, we have to reignite confidence in our economy again to show that we are strong enough to overcome our struggles and build stronger foundations for our country’s future.