But Sarb-administered contingency reserve account will be tapped for billions.
Despite growing pressure to hike taxes to balance the government’s books, Finance Minister Enoch Godongwana did not announce any major tax increases in his 2024 Budget speech in Cape Town on Wednesday.
No value-added tax (Vat) hike, no clear wealth tax, and no increases in the fuel levy and Road Accident Fund levy for the third year in a row.
But this has come at a cost – Godongwana and National Treasury have been forced to tap into SA’s Gold and Foreign Exchange Contingency Reserve Account (GFECRA) for the first time in two decades.
The GFECRA is administered by the South African Reserve Bank (Sarb). The move, tabled by Godongwana in his budget speech and related document, means that SA will be able to rein in debt, provide for public wage increases for nurses, doctors and teachers, and keep SA’s budget deficit as a percentage of GDP at 4.9%, as tabled in the 2023 Medium-Term Budget Policy Statement (MTBPS) in November.
Watch: Finance minister delivers 2024 Budget speech.
Here are the highlights
SA’s fiscal framework
| 2023/24 | 2024/25 | 2025/26 | 2026/27 | |
| Total revenue | R1,921.4bn* | R2,036.6bn | R2,176.4bn | R2,323.6bn |
| Total expenditure | R2,268.9bn | R2,369bn | R2,471.4bn | R2,597.8bn |
| Budget deficit as a percentage of GDP | -4.9% | -4.5% | -3.7% | -3.3% |
| Debt as a percentage of GDP | 73.9% | 74.1% | 75.3% | 74.7% |
| Debt service costs | R356.1bn | R382.2bn | R414.7bn | R440.2bn |
* Revised estimate
SA GDP and CPI
| Economic outlook | 2023 | 2024 | 2025 | 2026 |
| GDP growth | 0.6% | 1.3% | 1.6% | 1.8% |
| Consumer price inflation (CPI) | 6% | 4.9 % | 4.6% | 4.6% |
- Government is sticking to the fiscal strategy outlined in the 2023 MTBPS and will achieve a primary budget surplus in 2023/24, with debt stabilising by 2025/26;
- Debt-service costs will peak as a share of revenue in 2025/26 and decline thereafter; and
- The consolidated budget deficit is projected to narrow from 4.9% of GDP in 2023/24 to 3.3% by the end of the 2024 medium-term expenditure framework (MTEF) period.
Tax proposals
- Government to tap SA’s contingency reserves over the medium term (three-year budget cycle) to the tune of R150 billion, with another R100 billion to support the Sarb;
- No increases in income tax rates or Vat;
- No fuel or Road Accident Fund levies (this will result in tax relief of around R4 billion);
- No inflation adjustments to the personal income tax tables and medical tax credits;
- Income tax will only be paid by those who earn more than R95 750 a year (rising to R148 217 for those aged between 65 and 75, and R165 689 for those aged 75 or older);
- Government proposes tax increases totalling R15 billion in 2024/25 to alleviate immediate fiscal pressures;
- SA will implement a global minimum corporate tax, with multinational corporations subject to an effective tax rate of at least 15%, regardless of where its profits are located;
- Producers of electric vehicles in the country will be able to claim 150% of qualifying investment spending as an incentive to aid the transition to new energy vehicles.
Sin taxes
Sin taxes were increased above inflation in most cases.
| Increase in duty | |
| Can of beer (340ml) | 14c |
| Bottle of fortified wine (750ml) | 47c |
| Spirits (whiskey, brandy (750ml) | R5.53 |
| Pack of 20 cigarettes | 97c |
| Cigars (23g) | R9.51 |
| Nicotine and non-nicotine solution electronic cigarettes/vaping | 14c per ml |
Social grants
SA’s social grants increase is below the 5% mark for 2024, with the main increase in April and a marginal increase in October. However, the increases are below the current inflation rate.
| Grant: | Value: | Increase (2024): | Beneficiaries (as of December 2023): |
| Foster Care | Current: R1,130 April 2024: R1,180 | R50 (4.4%) | 222,317 |
| Child Support | Current: R510 April 2024: R530 | R20 (3.9%) | 13,067,314 |
| Old Age (>75 years) | Current: R2,110 April 2024: R2,200October 2024: R2,210 | R100 (4.7%) | 3,999,326 |
| Old Age (<75 years) | Current: R2,090 April 2024: R2,180October 2024: R2,190 | R100 (4.8%) | |
| Disability | 1,065,838 | ||
| Care Dependency | 161,826 | ||
| War Veterans | Current: R2,110 April 2024: R2,200October 2024: R2,210 | R100 (4.7%) | 10 |
Source: https://www.moneyweb.co.za/in-depth/budget/budget2024-in-a-nutshell-no-major-tax-hikes/
