President Cyril Ramaphosa shares a joke with Enoch Godongwana before making budget speech. Photograph :Phando Jikelo/African News Agency(ANA)
Finance Minister Enoch Godongwana made a number of points that will impact all South Africans .
Here are the major items that were tabled:
Eskom handed R254bn to service its huge debt
The government will be taking over R254 billion of Eskom’s colossal R423bn debt in a bid to address the power utility’s persistently weak financial position and enable it to conduct the necessary investment and maintenance.
Godongwana said the debt relief the government was proposing had strict conditions and would be about R168bn in capital, and R86bn in interest over the next three years.
“We are proposing a total debt-relief arrangement for Eskom of R254bn. This consists of two components: one is R184bn. This represents Eskom’s full debt settlement requirement in three tranches over the medium term,” Godongwana said.
“Second is a direct take-over of up to R70bn of Eskom’s loan portfolio in 2025/26. Because of the structure of the debt relief, Eskom will not need further borrowing during the relief period.
“Government will finance the arrangement through the R66 billion baseline provision announced in the 2019 Budget, and R118 billion in additional borrowings over the next three years,” he said.
Tax incentives for renewable energy
Government will introduce a new tax incentive for individuals to install rooftop solar panels to reduce pressure on the grid and help ease load shedding, according to Godongwana.
“Individuals who install rooftop solar panels from 1 March 2023 will be able to claim a rebate of 25 per cent of the cost of the panels, up to a maximum of R15 000. This can be used to reduce their tax liability in the 2023/24 tax year. This incentive will be available for one year.”
Godongwana also took companies into consideration.
Changes to the Bounce Back Loan Guarantee Scheme are also proposed to incentivise renewable energy, rooftop solar, and address energy-related constraints experienced by small and medium enterprises, according to the minister.
“Government will guarantee solar-related loans for small and medium enterprises on a 20 per cent first-loss basis. The National Treasury will launch the Energy Bounce Back Scheme in April 2023.”
Social grants will increase from R233 billion to R248.4 billion – Budget 2023
In a bid to accommodate the increased number of recipients of social grants, the National Treasury it has increased the expenditure on social grants, as it extends the Covid-19 social relief of distress.
According to the 2023 Budget document, expenditure on social grants would increase from R233 billion in 2022/23 to R248.4 billion in 2025/26 due to increases in the number of recipients and the value of the grants.
“Excluding the Covid-19 social relief of distress grant, social grant coverage is expected to increase from about 18.6 million beneficiaries in March 2023 to 19.6 million beneficiaries by March 2026,” according to the budget.
Godongwana said R30 billion will be used for inflation-linked increases for other social grants.
Income Tax
Taxpayers can breathe a sigh of relief. Income tax rates have not been increased and the minister said taxpayers will pay less income tax.
“The personal income tax brackets will be fully adjusted for inflation, which will increase the tax-free threshold from R91 250 to R95 750,” he said.
“Medical tax credits will also be increased by inflation, to R364 per month for the first two members, and to R246 per month for additional members.”
“The retirement tax tables for lump sums withdrawn before retirement, and for lump sums withdrawn at retirement, will be adjusted upwards by 10 percent. This means that the tax-free amount that can be withdrawn at retirement increases to R550 000,” Godongwana added.
Tax on booze and cigarettes, but sugar sector gets relief
The existing and expanding tax bases has made it possible to provide some relief to the sugar industry in imposing a further increase in the health promotion levy – also known as the sugar tax.
Originally, the National Treasury introduced the levy on drinks with more than 4g/100ml of sugar.
The rate is currently fixed at 2.1 cents per gram of the sugar content that exceeds 4g/100ml, ie the first 4g/100ml are levy-free. This followed a nominal increase in April last year.
The tax is charged on non-alcoholic sugary beverages, except fruit juices, and practically works out to about 10% to 11% per litre of the sugary drink.
The government is also proposing an increase in excise duties on alcohol and tobacco of 4.9%, in line with expected inflation.
The duty on:
∎ A 340ml can of beer increases by 10 cents.
∎ A 750ml bottle of wine goes up by 18 cents.
∎ A 750ml bottle of spirits is to increase by R3.90.
∎ A 23g cigar is going up by R5.47.
∎ And on a pack of 20 cigarettes, the duty rises by 98 cents.
LISTEN: Momentum Investments economist Sanisha Packirisamy explains the finance minister’s budget
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