South African Finance Minister Enoch Godongwana delivered his annual budget to lawmakers in Cape Town on Wednesday (25 February).
The country’s macroeconomic position improved markedly from a year ago, with public debt having stabilised and government coffers benefiting from a surge in mining income.
Here’s a rundown of who will be impacted:
Winners
Individual taxpayers
Godongwana scrapped previously announced plans to raise an additional R20 billion in taxes after revenue collection beat expectations, thanks mainly to a commodities boom.
Personal-income-tax brackets and medical tax credits will be adjusted for inflation, the first time in three years such relief has been provided.
Capital-gains-tax and donations-tax exemption thresholds were also raised, as were contribution limits for tax-free investment savings accounts and retirement funds.
Small businesses
Asset disposals by small businesses of as much as R15 million will be exempt from capital gains tax, a 50% increase on the current limit.
Value-added tax registration thresholds will also be raised, while turnover taxes for micro businesses will be adjusted to take account of inflation.
Construction companies
The government is ramping up investment in logistics, energy, water and sanitation projects, with the budget providing for R1.07 trillion in infrastructure investment over the next three fiscal years.
With the government and state companies lacking implementation capacity, a slew of contracts should be up for grabs.
The security forces
The police force and the military were each allocated an additional R1 billion to help them tackle organised crime.
Bondholders
The National Treasury said its borrowing requirement has declined “markedly” since a year ago, in part because it collected more tax than anticipated, and that the budget deficit will come in slightly lower than expected.
Those developments should continue to drive bond yields down, which will benefit existing debt holders.
Losers
Smokers and drinkers
Godongwana raised taxes on alcohol and tobacco, increases that have long been standard fare in the budget.
Duties on beer, wine, spirits and cigarettes will all rise by 3.4% with effect from April 1.
Motorists and commuters
The budget provides for increases in the general fuel levy, the Road Accident Fund levy and carbon taxes. In total, taxes charged on a litre of 93 octane petrol will rise by 21 cents to R6.58.
The effect on pump prices should be more than offset by lower international crude prices, although there’s no certainty that those will hold.
Defaulting municipalities
State power utility Eskom Holdings SOC Ltd. will take over the distribution of electricity in municipalities that fail to settle outstanding debts – a measure the Treasury says is needed to ensure revenue is collected and reliable services can be maintained.
The adoption of the so-called Distribution Agency Agreements could deprive local authorities of a key source of income.
The municipalities’ arrears to Eskom have steadily risen, with those participating in a so-called Municipal Debt Relief Program owing Eskom R85.2 billion.
