A Difficult Budget Offers Little Direct Relief
In his 2024 Budget Speech, Minister Godongwana had to walk a balancing act, trying to help stressed consumers in a difficult economic environment. Here’s a breakdown of what it means for you.
Increased Social Grants
The government is increasing child support and disability grants to keep up with rising prices. They’re also extending the Covid relief grant until next March, which helps millions of people facing financial difficulties. Originally introduced as a shield against the economic fallout of the coronavirus pandemic, this monthly stipend has proven to be a lifeline for individuals and families facing financial hardships.
Income Tax Remains Steady, But Tax Brackets Unchanged
While income tax rates aren’t going up directly, the government plans to collect more taxes by not adjusting tax brackets for inflation. This means if you get an inflation-linked raise, you might end up paying higher taxes.
Other Taxes Going Up
Certain taxes, like those on alcohol and cigarettes, are increasing. This could make these products more expensive, affecting your budget. Key points to note are sin-tax increases. For example, a can of beer is now taxed at 14c for 340ml, spirits at R5.53 per 750ml and a pack of cigarettes at 97c. However, Value Added Tax (VAT) remains unchanged, as do the fuel and Road Accident Fund levies.
Economic Growth
Despite the lingering challenges posed by the pandemic, there is good news. The South African economy is forecasted to witness a steady recovery. Economic growth is projected to average 1.6% over the next three years, showcasing cautious optimism compared to the 1.4% projected in November. GDP is anticipated to expand by 1.3% this year, with growth rates of 1.6% in 2025 and 1.8% in 2026. These projections present potential opportunities for businesses, particularly in the earned wage access sector, as the economy strengthens.
Workers Will Need All The Support They Can Get
In summary, Minister Godongwana has plotted a balanced course through a difficult economic environment. However, with little to no direct relief on the way for South African consumers, it is more important now than ever for employers to look at how they can support their employees. Earned-wage access offers hard-hit workers substantial benefit, and doesn’t cost employers anything but goodwill.