2021 Budget Summary
2021 Budget – The Main Points
This month, Finance Minister Tito Mboweni laid out the national budget and explained how the country will cover ‘normal’ expenses and also pay over R19.3 Billion for Covid-19 vaccines during a time of economic disaster.
R19.3 Billion is what it is going to cost to do this round of vaccines for the current forms of Covid-19. The vaccines will not be paid for by introducing any new taxes. The majority of South Africans will be able to access the vaccine for free.
‘R19.3 Billion is what it is going to cost to do this round of vaccines for the current forms of Covid-19’
The planned roll out is scheduled for 2 years.
There will be no sudden spike in personal tax (as many feared). Government feels that this would be counterproductive to trying to stimulate the economy.
Government is, however, still earning too little from current taxes to cover all its bills. They expect to bring in R1.21 trillion in taxes for 2020/21 (that’s about R213 billion less than they had expected before the pandemic hit).
Corporate tax stays at 28% (and may drop to 27% next year).
VAT stays at 15%
There have been some slight shifts in regard to personal tax and who pays UIF as well as an extra 15 cents per litre added for RAF to the fuel levy (total increase 27c/litre).
An additional R6.3 Billion is allocated to keep the emergency covid-19 grant going until the end of April 2021.
Smokers & Drinkers
It will once again become more expensive to smoke and drink as Governement is adding another 8% duty onto these products.
The minister had little good news here and acknowledged that things are bad and little has been done to provide new jobs. The Pandemic caused a wave of job losses and reduced the number of new jobs available. There are projects underway that have helped create many thousands of jobs and currently there are plans to create another 180 000 (temporary) jobs by March this year.
Government had negotiated to increase public servants wages by set amounts over time but have had to change their commitment. This has lead to legal challenges from unions. The Constitutional Court has been involved. Government says it simply cannot afford the pay increases when the economy and taxes are so bad.
Paying All The Debt
Any family under financial pressure knows that over time as you take on more and more debt, you end up paying back more and more each month towards your debt. You get caught in a downward debt spiral. The country is on the brink of such a disaster. The previous 2020 budget had aimed to reduce these debt repayments over time but now in the wake of the pandemic this seems unrealistic. By 2024 the country will pay the first R338.6 in taxes brought in just to cover the cost of the money they have already borrowed. New plans will have to be made.
Wondering where all the money goes? Here are some of that info in a chart: