Economic Context: The Minister acknowledged the economic stagnation over the past decade, with GDP growth averaging less than 2%. In 2024, the economy grew by only 0.6%, and medium-term projections estimate an average growth of 1.8%. The speech emphasized the need for faster, inclusive economic growth to meet developmental goals.
The Minister of Finance, Mr. Enoch Godongwana, tabled his budget review on 21st February 2024. While tax revenue performed well in 2021/22 and 2022/23 due to high commodity prices, revenue for 2023/24 is now expected to fall short by R56.1 billion. Government has proposed tax increases totalling R15 billion in 2024/25 to alleviate immediate fiscal pressures, while limiting the impact on economic growth. The following were the key tax proposals:
Introduction
The minister of finance will table his budget proposals on February 21st, 2024.Some of the key predictions on the back of an election year are as follows:
The Minister of Finance, Mr Enoch Godongwana, will deliver the National Budget Speech on 22 February 2023. As usual, the budget allocation always aims to strike a balance between competing national spending priorities and limited resources.
Main budget non‐interest spending increases by a net R282.3 billion over the medium‐term expenditure framework (MTEF) period compared to the 2021 Budget. This increase is supported by higher‐than‐anticipated revenue collections and does not jeopardise the path to deficit reduction. Total consolidated government spending will amount to R6.62 trillion over the next three years. Additional allocations of R110.8 billion in 2022/23, R60 billion in 2023/24 and R56.6 billion in 2024/25 are made for several priorities that could not be funded through reprioritisation. These include the special COVID‐19 social relief of distress grant, the continuation of bursaries for students benefiting from the National Student Financial Aid Scheme, and the presidential employment initiative. Debt‐service costs will average R333.4 billion per year.
Following a weaker‐than‐expected third quarter, economic growth for 2021 has been revised down to 4.8 per cent, compared with 5.1 per cent estimated at the time of the 2021 Medium Term Budget Policy Statement (MTBPS). The medium‐term growth outlook has improved moderately. Treasury projects real economic growth of 2.1 per cent in 2022, the year in which the economy is expected to return to pre‐pandemic production levels. GDP growth is expected to average 1.8 per cent over the next three years.
The Minister of finance Enoch Godongwana tabled his Budget review on the 23rd February 2022. The following were the key tax issues arising.
The 2022 MTBPS presents a strategy to continue stabilising the public finances while supporting economic growth in a highly volatile global economy. Fiscal consolidation is achieving the objectives of the strategy originally outlined in the 2020 MTBPS. Lifted by better-than-expected revenues, the fiscal position is stronger. At the same time, increased funding for safety and security, fighting corruption and delivering infrastructure will support longer-term growth prospects.
“Democracy will have little
The fiscal position has improved since the 2022 Budget as a result of better-than-expected revenue collection. Government will use this revenue to increase spending in health, education and local government free basic services, infrastructure, and security and safety. At the same time, it will narrow the budget deficit, and address fiscal and economic risks posed by Denel, SANRAL and Transnet. Government remains committed to returning the public finances to a sustainable position.
The supportive global conditions that spurred the economic recovery in 2021 are dissipating, and domestic shocks – particularly power cuts – have lowered economic growth and confidence. A broad slowdown in global growth and high inflation are forecast. Rapid and decisive implementation of structural reforms, especially in the energy sector, supported by a clear and stable macroeconomic framework and improved state capability, remain crucial to improve the economy’s productive capacity and international competitiveness.
