Monday, 17 February 2025
22.7 C
Durban

Insights into SA’s 2024 Budget and its trajectory

Home Business Management Finance & Investment Insights into SA’s 2024 Budget and its trajectory

By Dr Chris Blair, CEO of 21st Century

IN the unfolding narrative of South Africa’s economic landscape, the 2024 budget speech by Finance Minister Enoch Godongwana stands as a pivotal chapter, articulating a fiscal strategy meticulously designed to navigate the tumultuous waters of economic uncertainty without resorting to the imposition of onerous tax burdens. By electing to leverage the nation’s Gold & Foreign Exchange Contingency Reserve Account for significant funding, the strategy underscores a commitment to fiscal prudence whilst eschewing major tax hikes, a move that notably sustains the VAT, wealth tax, and levies on fuel and the Road Accident Fund at their current levels for an unprecedented third consecutive year.

This budget, with its tempered optimism, projects a gradual ascension in economic growth, from a modest 0.6% in 2023 to an anticipated 1.8% by 2026, alongside a promising reduction in consumer price inflation. The government’s fiscal blueprint envisages the attainment of a primary budget surplus, underpinned by strategic tax adjustments aimed at mitigating fiscal pressures, including the adoption of a global minimum corporate tax of at least 15% and fostering incentives for the burgeoning electric vehicle sector.

Yet, the essential question arises – what ramifications does this budget hold for the typical South African? The multifaceted implications of the budget reveal a tapestry of impacts. On one hand, the restraint of significant tax increments offers a semblance of relief amidst prevailing economic fluctuations, while on the other, the strategic utilisation of reserve funds to augment public sector wages in critical services heralds a reinforced allegiance to social expenditure.

Delving deeper into the individual impacts, the decision to maintain the current VAT rate alongside unchanged wealth tax and levies directly influences the cost of goods and services, thereby stabilising consumer expenses. However, the absence of adjustments in personal income tax tables to counter inflationary pressures ominously looms as a potential detriment to disposable incomes, heralding the phenomenon of “bracket creep” and the consequent erosion of real disposable income.

Most Popular

Financial close reached on 175 GW short-term PPA

SAPPI Southern Africa and Enpower Trading have reached Financial Close on a five-year 175 GWh per year renewable energy Power Purchase Agreement (PPA). This...

Transnet taking steps to repurpose Lilly Pipeline for LNG market

TRANSNET Pipelines (TPL) has issued a Request for Proposals (RFP) inviting interested parties to enter into a Heads of Agreement (HOA) to secure pipeline...

State refinery issues invite to supplier open day

THE South African National Petroleum Company (SANPC), a subsidiary of the Central Energy Fund (CEF) has invited prospective bidders to a supplier open day...

Richards Bay LNG Terminal parties commit to deliver in 2028

RICHARDS Bay is gearing up to be the country’s industrial liquid fuel hub after Transnet National Ports Authority (TNPA) signed two strategic Terminal Operator...