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Budget 2021 – the most important points
That month, Finance Minister Tito Mboweni set the state budget, explaining how the country will meet “normal” spending at a time of economic disaster, paying over R19.3 billion for Covid-19 vaccines.
R19.3 billion is what it will cost to get this round of vaccination for the current forms of Covid-19. The vaccines are not paid for by the introduction of new taxes. The majority of South Africans can access the vaccine for free.
“Rand 19.3 billion is what it will cost to get this round of vaccination for the current forms of Covid-19.”
The planned introduction is planned for 2 years.
There will be no sudden surge in personal taxes (as many feared). The government believes that this would be counterproductive to stimulate the economy.
However, the government still doesn’t earn enough from current taxes to cover all of its bills. They estimate they will be bringing in Rand 1.21 trillion in taxes for 2020/21 (that’s about R13 billion less than they expected before the pandemic broke out).
Corporate income tax remains at 28% (and may drop to 27% next year).
VAT stays at 15%
There have been some minor shifts in personal tax and UIF payment, plus an additional 15 cents per liter added to the fuel levy for the RAF (total increase 27c / liter).
A further R 6.3 billion will be made available to maintain the emergency Covid-19 grant through the end of April 2021.
Smokers & Drinkers
Smoking and drinking become more expensive again as the government adds another 8% tariff to these products.
The minister had little good news here, admitting that things are bad and little has been done to create new jobs. The pandemic caused a wave of job losses and reduced the number of new jobs. Projects are under way which have contributed to the creation of many thousands of jobs, and there are plans to create another 180,000 (temporary) jobs by March this year.
The government had negotiated to increase civil servants’ wages by fixed amounts over time, but had to change its commitment. This has created legal challenges for trade unions. The constitutional court was involved. The government says it just can’t afford the wage increases when the economy and taxes are so bad.
Pay off all debts
Any family under financial pressure knows that over time, as you take on more and more debt, you will pay back more and more of your debt each month. You get into a downward spiral of debt. The country is facing such a disaster. The previous 2020 budget aimed to reduce these debt payments over time, but now, after the pandemic, this seems unrealistic. By 2024 the country will pay the first tax of R 338.6 to cover the cost of the money already borrowed. New plans have to be made.
Wondering where all the money goes? Here is some of that information in a table:
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