Does Enoch’s budget mean more cash in your pocket?

Finance minister Enoch Godongwana's budget measures aimed at putting more money in the hands of South Africans will encourage investment but this could be dampened by soaring global fuel prices.

Godongwana's budget speech delivered on Wednesday announced no income tax increases, cuts in corporate tax and no hikes in the general fuel levy and Road Accident Fund levy for the first time in three decades to give reprieve to struggling consumers from skyrocketing fuel prices.

Godongwana said keeping the fuel levies unchanged would provide tax break of R3.5bn to struggling motorists.

Economists, however, said the fuel price reprieve could be short-lived due to unstable and rising international oil prices.  

Wits Business School visiting professor Jannie Rossouw said the budget by Godongwana was the best SA could get at this point.

“This definitely keeps money in the hands of South Africans because grants are going up and there’ll be no increase to personal tax. But, in terms of fuel increases, it is out of the minister’s hands because fuel can still go up if oil prices go up or the rand depreciates.

“With Russia moving into the Ukraine, there is great uncertainty globally in the oil prices, so that is one of the main concerns around that,” Rossouw said.

Economist Lumkile Mondi said South Africans “will have to swim through the tide on the petrol prices as the oil price is not in our hands”.

“The idea with this budget is to stimulate investment and buying trust for a social pact towards an inclusive economy,” Mondi said.

Mondi said with no increases on personal taxes, that may see South Africans who are struggling currently having some money, they wouldn't ordinarily have, in their pockets.

Godongwana said this is not the time for taxes to be increased as it may put the country's economic recovery at risk.

“Accordingly, we have decided to keep money in the pockets of South Africans. This Budget includes R5.2-billion in tax relief to help support the economic recovery, provide some respite from fuel tax increases, and boost incentives for youth employment,” Godongwana said.

The minister announced that R76bn has been allocated for job creation programmes with an additional R18.4bn is made available for the Presidential Employment Initiative which is currently being rolled out at different spheres of government.

He said R44bn has been allocated for a 12-month extension of the R350 social relief of distress (SRD) grant.

Godongwana also announced that those earning less than R91,350 per annum would enjoy tax-free income as he emphasised that they have decided to keep money in the hands and pockets of South Africans.

He said that the old age, war veterans, disability and care dependency grants will increase by R90 in April and a further R10 in October. The foster care and child support grants will increase by a one-off R20 in April.

Motorist Tshepo Tsotetsi, 35, from Orlando West, Soweto, said it's a good move that the fuel levies have not been increased.

“But due to my experience the petrol price is going to increase in the coming few months either way. It is going to increase because of inflation and stuff. It is pointless... what is he saying because at the end of the day it will increase like it has been,” said Tsotetsi.

Another motorist, Brian Matsepe of Berea, Johannesburg, said with or without the levy increasing the petrol price was still very high currently.

“I spend more than R2,000 a month on petrol. It is crazy. Keeping the fuel levy where it is will not make any difference,” said Matsepe.

Unemployed people have welcomed the extension of the R350 SRD grant.

Kate Baloyi, 30, of Alexandra, who has been receiving the SRD grant since its first rollout in April 2020, said: “This grant is better than nothing. I am able to add more groceries when we run out food at home.”

Pinkies Thwala, 50, from Diepkloof Zone 1, Soweto, said: “I have seen a lot of people saving this money and starting a business. I want to do the same.”