Big Emitters:<\/strong><\/p>\nThe Treasury will extend the first phase of its carbon tax by three years until December 2025. That means companies such as Sasol and the state-owned Eskom Holdings can benefit longer from tax-free allowances and revenue-recycling measures. The carbon price, though, will rise progressively each year.<\/p>\n
Motorists:<\/strong><\/p>\nCar owners, users of public transport and other consumers will get some relief from the Treasury not increasing the fuel and Road Accident Fund levies for the first time since 1990. The cost of a liter of fuel rose about 40% last year due to the rebound in oil prices, pushing consumer inflation to the highest level in almost five years. Taxes make up a third of what motorists pay at the pump.<\/p>\n
Middle-Income Taxpayers:<\/strong><\/p>\nTax brackets will be increased in line with the 4.5% inflation the Treasury projects for the 2022-23 fiscal year, shielding people who pay personal income levies from so-called \u201cbracket creep.\u201d<\/p>\n
Below-inflation adjustments to personal income tax brackets and fuel levies are usually an easy source of extra revenue for the state.<\/p>\n
The relief is mainly targeted at people in the middle-income group, the Treasury said.<\/p>\n
Welfare Recipients:<\/strong><\/p>\nMonthly social grant payouts to pensioners, military veterans and people with disabilities will increase by 5%, compared with only 1.6% last year. The child support grant will rise by 4.3%. Millions of people rely on these payments as their only source of income and the adjustment should boost consumer spending.<\/p>\n
\nLosers:<\/strong><\/p>\nState Workers:<\/strong><\/p>\nCivil servants will have to accept the Treasury\u2019s hard line on pay increases or face possible retrenchment. The budget shows total compensation will only grow by an annual average of 1.8% for the next three years and while it allocates R20.5 billion in 2022-23 to meet the cost implications of a 2021 wage deal, there is no extra funding provision beyond that.<\/p>\n
This could anger labor unions representing the 1.3 million people employed by the government.<\/p>\n
The Wealthy:<\/strong><\/p>\nPeople with business interests who pay provisional tax and who have assets worth more than R50 million will have to start declaring specified assets and liabilities at market values in their tax returns.<\/p>\n
The Treasury says this will \u201cassist with the detection of non-compliance or fraud through the existence of unexplained wealth,\u201d which means the super-wealthy may end up paying more.<\/p>\n
Sugar Producers:<\/strong><\/p>\nThe struggling sugar industry could face further reduction in demand when the health promotion levy on sweetened drinks increases by 4.5%. That could hurt companies such as Tongaat Hulett. The government will also start consultations to lower the tax threshold for sugar content and extend the measure that was first announced in the 2017 budget to fruit juices.<\/p>\n
Alcohol and Tobacco Industry:<\/strong><\/p>\nAn increase of 4.5% to 6.5% in excise duties on alcohol will add extra pressure to an industry that was hit hard by some outright sale bans and more than two years of trading restrictions as part of South Africa\u2019s Covid-19 regulations.<\/p>\n
In addition to increases of 5.5% to 6.5% in the levies on tobacco products, the government proposed a flat excise duty on nicotine and non-nicotine solutions. That will add to the price of vaping products.<\/p>\n
\nBudget Highlights:<\/strong><\/p>\nBelow are the highlights of South Africa\u2019s 2022 annual budget:<\/p>\n
\n- The budget continues last year\u2019s shift to more market-friendly policies, with windfall revenue partly from a commodities boom used to reduce taxes and the deficit.<\/li>\n<\/ul>\n
Forecasts<\/h3>\n\n- The consolidated budget shortfall is forecast at 5.7% of gross domestic product for the fiscal year to end-March. That\u2019s down from the 7.8% projected three months ago.\n
\n- R182 billion more tax will be collected than expected in the 2021 budget.<\/li>\n<\/ul>\n<\/li>\n
- The shortfall is seen at 6% in 2022-23, narrowing to 4.2% by 2024-25.<\/li>\n
- Spending will increase to R2.157 trillion in 2022-23 from R2.077 trillion this fiscal year.<\/li>\n
- The Treasury anticipates a primary budget surplus in 2023-24, a year earlier than it projected in November.<\/li>\n<\/ul>\n
Taxes<\/h3>\n\n- Many of the tax hikes of past years did nothing to boost revenue or the economy, the National Treasury says.\n
\n- \u201cTaxes inevitably distort economic activity as taxpayers change their behavior\u201d.<\/li>\n<\/ul>\n<\/li>\n
- Godongwana keeps to his predecessor\u2019s plan to lower the company tax rate by a percentage point to 27%.\n
\n- The effect of the drop will be offset by restricting the use of assessed losses (offsetting of the balance of losses brought forward will be limited to 80% of taxable income). Smaller companies will be exempt, though.<\/li>\n
- The employment tax incentive increases by 50% to help encourage companies to hire more young people.<\/li>\n<\/ul>\n<\/li>\n
- Individuals get relief, through adjustments to tax brackets and thresholds.<\/li>\n
- The fuel and Road Accident Fund levies stay the same \u2013 that\u2019s the first time since 1990 that those taxes haven\u2019t increased.<\/li>\n
- To clamp down on unexplained wealth, all provisional taxpayers with assets of more than R50 million will have to declare specified assets and liabilities at market values in their 2023 returns.<\/li>\n
- First phase of the carbon tax, with its tax-free allowances and revenue-recycling measures, is extended for three years until the end of 2025. The government plans to progressively increase the carbon price each year.<\/li>\n
- A \u201cbounce-back\u201d project will be introduced to help small businesses, with r15 billion of loan guarantees offered through lenders.<\/li>\n<\/ul>\n
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