Our Finance Minister, Nhlanhla Nene, presented his first annual budget speech to parliament and the millions of South Africans who listened in anticipation of what laid ahead for our ‘piggy banks’ in what is considered to be a strenuous time for the economy. The 2015 budget aims to endorse spending that is accountable, clear and forthcoming to the needs of the people. This will keep South Africa on the right track which will allow us as a country to expand on our successes achieved over the past 21 years.
In light of the limited amount of revenue harvested by government, measures have been put in place to cut down on negligent spending and improve overall performance. This includes limiting the amount of money being spent on non-essential items to make more resources available to critical areas.
The budget speech was received with much applause, criticism and debate. The implications of the 2015 budget can be summarised as follows:
Personal Income Tax
There will be an increase of 1% in personal tax for all taxpayers earning more than R181 900 per annum. This means if you are below 65 years and have an annual income of R200, 000 for example, your tax will increase by R21 per month. An individual earning R500, 000 per annum will see their tax rise by R271 more per month. If your earn R1.5 million per annum, you will be taxed an extra R1, 105 per month.
Fuel and Road Accident Fund Levies
From the 1 April 2015, the general fuel levy will increase by 30.5c per litre and the Road Accident Fund levy will increase by 50c per litre. This will essentially raise the general fuel levy to R2.55 per litre of petrol and R2.40 per litre of diesel. The silver lining on this grey cloud is that the Road Accident Fund compensates people injured in road accidents on South African roads and is therefore important to all road users so the increase is essentially for our benefit.
Government has reaffirmed its commitment to assisting the most vulnerable citizens of our country. The state old age grant, care dependency grant and disability grant will be increased by R60 each, the foster care grant will increase by R30 and recipients of the child support grant will receive R15 more than last year.
The tax on electricity is going to increase temporarily. Since 2010 there has been a levy of 3.5c on every kwh of electricity sold. So stock up on your candles because load shedding is not going anywhere and every kwh of electricity will increase to 5.5c until Carbon Tax is implemented in 2016. The good news is that the extra revenue will be used to inject funds into bigger incentives for energy efficiency.
If you are still trying to enjoy a few small pleasures in life, you will have to dig a bit deeper into your pocket. The excise duties on alcoholic beverages, specifically beer, sparkling wine and spirits will increase by between 4.8% and 8.5%. As for drinks, the excise duty on malt beer is increased by 9 cents per 340ml can, unfortified wine by 13 cents per 750ml bottle and fortified wine by 27 cents per 750ml bottle.
Saying “cheers” is going to cost 48 cents more per 750ml bottle of sparkling wine. Ciders and alcoholic fruit beverages are going up by 7 cents per 330ml bottle, while spirits will be R3.77 more per 750ml bottle.
South Africans wishing to take smoke breaks, will have to cough up 82 cents per packet of 20 cigarettes more from now on, while those indulging in the luxury of a cigar will pay R3.09 more per 23g.
As we make note of all the increases that will be forthcoming and prepare ourselves to adjust to the cost of living, members of parliament have taken notes as well and are ready to get to work. It is crucial to start saving as much as you can in order to compensate for the pinch in our pockets. Be money wise and you can very well out-smart our 2015 budget.