7 things to watch out for in this year’s budget speech – Including tax hikes
The 2024 Budget Speech is almost upon us, and Finance Minister Enoch Godongwana has already warned South Africans to brace for a challenging year.
The minister gave this warning in his Medium-Term Budget Policy Statement (MTBPS) in November 2023, projecting a government revenue shortfall of approximately R54 billion in the 2024/25 financial year.
Godongwana said there are two ways that the government will likely address its funding problem – increasing the tax base, and being more efficient with tax administration.
The challenges facing the South African economy have huge implications for South African citizens and businesses as they try to manage their finances and make ends meet.
However, leading accounting, payroll, and payment systems provider Sage expects that the 2024 Budget Speech will not only offer bad news.
Below, Sage experts Yolandi Esterhuizen, Director of Global Compliance for Product Management and Sage AME & registered tax practitioner, and Senior Compliance Specialists Motumi Tsoeute and Bazil Marema, outline 7 key things South Africans can expect from the upcoming budget speech.
The bad
Godongwana’s MTBPS projected a miss of nearly R57 billion for the current tax year and a R54 billion shortfall for the upcoming 2024/2025 tax year.
As a result, the government will be trying to improve its bottom line while reducing spending throughout the year, and this has several bad implications for taxpayers.
Sage experts expect the following:
1. Income bracket shifts – While only an inflationary increase is expected for income tax, Sage expects the government to increase those taxes which affect mainly the wealthier taxpayer. There is a possibility of a wealth tax being added, too.
2. Fuel levy increases – Recent high petrol and diesel prices saw the government keep the fuel levy constant for a few years. However, it will likely increase with inflation this year.
3. Delays for National Health Insurance (NHI) – The NHI has faced many roadblocks, and it is likely that its implementation will be delayed. Reasons for this include uncertainty about how it will be funded, as well as the challenge of introducing new payroll taxes.
4. Corporate income tax likely to be steady – Experts were hoping for a reduction in corporate income tax, but this seems unlikely.
The good
The hope for 2024 is that the high points of the Budget Speech will outweigh the lows.
Sage expects the following positives to come out of the budget speech:
5. Diesel refunds for smaller generators – It has been suggested that 2023’s diesel refunds for food producers be expanded to businesses using generators.
6. Solar energy tax credits – It is hoped tax incentives for household solar power solutions will be extended past the current deadline.
7. Catering to remote workers – The pandemic-induced shift to remote working will hopefully see an update to the tax treatment of home office and travel expenses.
About Sage
Whatever the outcome of the 2024 Budget Speech, Sage can help your business remain tax-compliant and efficient through its accounting, payroll, and HR tools.
