It is expected that not all societal and business sectors will benefit from the annual budget speech. And after Finance Minister Enoch Godongwana presented his first budget speech today, not all were left benefitting from the changes.
Here’s who’s at a disadvantage after the budget announcements:
State Workers
The Treasury is drawing a hard line on pay increases or face possible retrenchment. According to the budget, total compensation will only grow by an annual average of 1.8% for the next three years. And while R205 billion is allocated in 2022-23 to meet the cost implications of 2021’s wage deal, no extra funding is provided beyond that.
This decision runs the risk of angering labour unions representing the 1.3 million people who are employed by the government.
Wealthy Citizens
During the budget speech, Godongwana revealed that people with business interest who’re paying provisional tax and who have assets worth more than R50 million will now have to start declaring specified assets and liabilities at market values in their tax returns.
According to the Treasury, this will “assist with the detection of non-compliance or fraud through the existence of unexplained wealth”. In other words – the very rich may end up paying more.
Sugar Producers
The health promotion levy on sweetened drinks will be increased by 4.5%. This means that the already-struggling sugar industry could be facing a further reduction in demand.
Furthermore, the government will also be starting consultations to lower the tax threshold for sugar content. They will also extend the measure that was originally announced in the 2017 budget to fruit juices.
Alcohol and Tobacco Industry
And finally, a sector that may be affecting the larger amount of South African citizens – both the alcohol and tobacco industry is negatively affected after the budget speech.
The alcohol industry was already hit hard by the pandemic and now they are facing an increase of 4.5% to 6.5% in excise duties – adding more pressure on the industry.
And there will also be an increase of 55% to 6.5% in the levies on tobacco products. With that, the government has also proposed a “flat excise duty” on nicotine and non-nicotine solutions.
Here are who benefitted from the 2022 budget speech.