The Boring Budget Speech – What Does it Teach?
This month the Minister of Finance presented government’s rather uninspiring updated budget for 2017/2018.
Mr. Pravin Gordhan, the Minister of Finance, presented government’s updated budget for the year ahead. There was nothing too flashy or extreme about the budget plans. There was an acknowledgment that income was not matching needed spending and so some minor adjustments are being made to reduce the bleed and bring debt in line with a ‘reasonable’ percentage of the GDP (48%) and ultimately to begin eventually reducing the debt.
The hardest hit were the rich, leading to this budget being described as the “robin hood” budget. With increased taxation on those earning over 1.5 Million Rand a year now sitting at 45% (ouch). It is hard being rich. According to the Minister 95% of the wealth in the country sits with 10% of the people.
Several tax brackets were adjusted slightly and there was as before incentives offered to consumers who save (tax free). Obviously, Government can see that few people are saving, especially those who earn less.
There will be increases in Alcohol and tobacco taxation as well as an increase in the fuel levy (about 30c/litre) coming. Mention was made of the changes being made to legislation which will allow for the pending”suger tax”.
So, what do we learn from this somewhat boring and ordinary budget speech?
We learn that if you don’t have enough money to cover your needs you need to increase income a little to do so.
We learn that you have to maintain what you have rather than go out and buy lots of new things.
We learn that doing a budget is not glamourous. It is boring but necessary (even for those under debt review).
We also learn that we should look to reduce the naughty luxuries in our lives to cut down on spending.
The budget speech also looks to set the minds of foreign investors and ratings agencies at rest, who can see what practical steps are being taken to balance what money comes in and goes out.
It is important to realise that things change from year to year and you may need to adjust what you had planned before
Learning From The Budget Speech
If you are struggling to repay everyone you owe funds to or are under debt review and have to stick to a budget figure you can learn from the recent budget speech. It is important to realise that things change from year to year and you may need to adjust what you had planned before to be more in line with the realities you now face. Cutting back on the luxuries and focussing on keeping what you already have working and in good order is also an important step. Where possible try to earn more and focus your spending on the areas that bring you and your family the most benefit.
Perhaps the most important thing we learn is that though budgeting is not glamourous it is important to have a budget and try stick to it.