Consumers want certainty about their income prospects from Finance minister Tito Mboweni’s budget speech on Wednesday (24 February) \u2013 including the minimum wage and personal income tax rates, says professional services firm PwC.<\/p>\n
The firm noted that the BER\/FNB Consumer Confidence Index jumped from a reading of -23 in the third quarter of 2020 to -12 in the fourth quarter.<\/p>\n
“However, this was still below the long-term average of -2, and the lowest festive season reading in five years. Overall consumer sentiment was net negative, indicating that consumers are concerned about the future,” it said.<\/p>\n
PwC said that key information – such as verification of government efforts to support consumers – could boost consumer confidence and, subsequently, their approach to spending.<\/p>\n
“By reporting on these points, Budget 2020 would substantiate the government\u2019s ability to support their household finances, specifically income streams at a time of record-high unemployment.”<\/p>\n
Comment on suggested basic income grant<\/strong><\/p>\n The ruling African National Congress (ANC) resolved in January 2021 that the state should develop a policy framework to introduce a basic income grant, PwC said.<\/p>\n It noted that there are now questions as to whether government will act quickly on the grant, given the current economic climate and the recent end to temporary unemployment benefits.<\/p>\n Speaking at the party\u2019s 109th-anniversary celebrations in January, president Cyril Rampahosa said consideration for the grant comes after emergency financial measures introduced around the Covid-19 pandemic come to an end.<\/p>\n Despite the country\u2019s limited resources, it needs to look at identifying other poverty alleviation measures, he said.<\/p>\n \u201cThis year the ANC government, and broader society, will need to continue discussions on the desirability and the viability of a basic income grant to provide a social safety net to poor people in our country,\u201d he said.<\/p>\n Potential increases in personal income tax rates<\/strong><\/p>\n The Medium-Term Budget Policy Statement (MTBPS) announced that tax increases will be implemented in the 2021\/2022 fiscal year to raise an additional R5 billion in revenue.<\/p>\n PwC said that personal income tax rates are the likely target \u2014 including a so-called ‘wealth tax\u2019 on high-net-worth individuals (HNWIs).<\/p>\n It said that Mboweni will need to address whether a wealth tax be implemented or if the increase in personal taxes will be more broad-based.<\/p>\n Extension of R350 Special Covid-19 grant<\/strong><\/p>\n Payment of this grant has been suspended and restarted more than once \u2014 most recently, it was announced in SONA 2021 that it would extended for another three months.<\/p>\n “While it has been a lifeline for millions of households, this short-term back-and-forth \u2014 will it continue, or won’t it? \u2014 creates uncertainties,” PwC said.<\/p>\n In his state of the nation on 11 February, Ramaphosa said that this grant has proven to be an effective and efficient short-term measure to reduce the immediate impact on the livelihoods of poor South Africans.<\/p>\n \u201cWe have also decided to extend the Covid-19 TERS benefit until 15 March 2021 only for those sectors that have not been able to operate.<\/p>\n \u201cThe conditions of this extension and the sectors to be included will be announced after consultations with social partners at NEDLAC.\u201d<\/p>\n Ramaphosa said that the National Treasury will work with its partners and stakeholders on improvements to the loan guarantee scheme so that it better addresses the realities of SMMEs and other businesses as they recover.<\/p>\n \u201cWe will work with our social partners to ensure that these and other interventions provide the relief to those who most need it,\u201d he said.<\/p>\n
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