Finance minister Enoch Godongwana is anticipated to make pronouncements on taxes, Eskom and grants in this year’s budget speech.
Under a strained economy, tough decisions will have to be made before Enoch Godongwana tables his budget speech. The finance minister will deliver the 2024 budget before Parliament on Wednesday.
Among prominent issues facing the country, PricewaterhouseCoopers (PWC) predicts the Covid-19 grant and Eskom will feature in the budget speech. The tax services provider also predicts an increase in taxes for South Africans already under pressure.
“Our wish is for Budget 2024 to be encouraging to the business community and to lift business sentiment by providing an update on progress made in key economic and structural reforms, as well as solutions towards the country’s energy and logistics challenges,” it said ahead of the budget speech.
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Taxes, Eskom and Grants
In his previous budget speech, the finance minister announced the Social Relief of Distress Grant (SRD), a feature of the Covid-19 pandemic, would continue to be disbursed until March 2024.
PWC, noting the lack of an alternative, predicts a possible inflation-linked increase for beneficiaries. “For now, the minister is likely to announce a marginal increase (inflation adjustment) to the SRD grant while noting that work is underway [on introducing an alternative],” it said.
With 2024 off to a frequently-dark start, Eskom, like other flailing parastatals, will also take centre-stage when the budget is allocated. On this front, the group looks forward to an update on restructuring of state-owned entities (SOEs).
“We would like to see a comprehensive update about the restructuring of Eskom. While there has been some progress in restructuring the utility, the process is behind schedule and weighing on the South African economy.”
South Africans might also be asked to reach deeper into their pockets. PWC is anticipating details on expected tax increases amounting to R15 billion, likely to affect personal income tax rates or corporate tax rates. An increase in value-added tax (VAT) remains an option, too.
“… To raise an additional R15 billion in tax revenues would require increasing the corporate tax rate by 1.4% to 28.4%, increasing personal income tax rates by 0.5% across all tax bands or increasing the VAT rate by 0.5% to 15.5%.”
Economist Dawie Roodt is also of the view that taxes may be bumped up. He is looking at sin tax and the fuel levy, among other types of tax. He said this would be the result of years of spending finally catching up.
