Words on Wealth: Budget brings welcome concessions for consumers

Discover how Finance Minister Enoch Godongwana’s latest Budget Speech offers unexpected relief for South African consumers, with significant changes to tax brackets and savings incentives. Finance MinisterEnoch Godongwana’sBudget Speechto Parliament on Wednesday was brighter than generally expected and a welcome turnaround from last year’s fiasco, when the Minister unilaterally tried to increaseVATwithout buy-in from the other parties in the Government of National Unity. I think we can safely say that since then the other parties have had greater influence on our country’s financial planning.

But the economic environment has also changed radically. Last year the government was desperately searching for ways to raise revenue, whereas this year, thanks to the commodity-boom windfall (largely of USPresident Donald Trump’smaking, I would suggest), the government is now able to offer some relief to taxpayers. Taxpayers won’t be paying less tax in most instances; they just won’t be paying more.

And through boosted incentives for long-term savings, they will hopefully be encouraged to save more. Hayley Parry, head of financial education at financial education provider Worth, says the Minister delivered a Budget that was “stability-focused with a strong leaning towards correcting consumer-based pain points that have hurt both the bank accounts and future financial standing of South Africans. “Government has withdrawn the previously proposed R20 billion in tax increases.

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There is no VAT hike and no broad-based income tax shock. That protects disposable income at a time when households are already stretched. Personal income tax brackets and rebates have been fully adjusted for inflation, after two years of no inflationary-linked adjustments.

This prevents ‘bracket creep’, where people pay more tax simply because of inflationary salary increases. It protects take-home pay, particularly for middle-income earners,” Parry says.

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