The 2024 Budget Speech in South Africa has unveiled a series of fiscal measures and spending programs that aim to balance economic growth with fiscal responsibility. This year’s budget is particularly noteworthy given its proximity to the upcoming elections, a factor that seems to have influenced the government’s cautious approach to major tax changes. The highlights of the budget reflect a strategic mix of tax adjustments and spending initiatives, designed to address immediate fiscal pressures while laying a foundation for future stability and growth. This analysis seeks to decipher the implications of these changes for South African taxpayers, business owners, and the broader political landscape.
Budget Tax Highlights
- Increase of between 6.7 and 7.2% in excise duties on alcoholic beverages.
- No change to personal income tax brackets, rebates and medical tax credits.
- Increase of between 4.7 and 8.2% in excise duties on tobacco products.
- No change to the general fuel levy and road accident levy.
- Plastic bag levy to increase to 32 cents per bag from 1 April 2024.
- Global minimum tax at 15% applies to large multinational groups of companies from 1 January 2024.
- Two-pot retirement reform to be implemented on 1 September 2024.
- Electrical and hydrogenpowered vehicle tax incentive to be introduced for manufacturers in 2026.
- Government proposes tax increases totalling R15 billion in 2024/25 to alleviate immediate fiscal pressures.
Spending Programmes
- As part of the overall changes, R251.3 billion has been added to the MTEF to ensure that the salaries of teachers, doctors, nurses, police and many other public servants are funded, and to maintain strong levels of social protection through 2026/27.
- Spending across functions supports the implementation of new and existing policy priorities. Learning and culture receives 24.4 per cent (R1.51 trillion) of the total function budgets, while general public services receives the smallest share at 3.7 per cent (R231.5 billion).
- An amount of R7.4 billion is set aside in 2024/25 for the presidential employment initiative.
- The social wage will constitute an average of 60.2 per cent of total non-interest spending over the next three years.
- Consolidated government spending will amount to R2.37 trillion in 2024/25, R2.47 trillion in 2025/26 and R2.6 trillion in 2026/27.
Budget Framework
- Government is staying the course on the fiscal strategy outlined in the 2023 Medium Term Budget Policy Statement (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.
- The consolidated budget deficit is projected to narrow from 4.9 per cent of GDP in 2023/24 to 3.3 per cent by the end of the 2024 medium-term expenditure framework (MTEF) period.
- The balanced approach to fiscal consolidation includes expenditure restraint and moderate revenue increases, while continuing to support the social wage and ensuring additional funding for critical services.
- Government will, after extensive consultation, propose a binding fiscal anchor for future sustainability. In the interim, the debt-stabilising primary surplus will anchor fiscal policy.
The 2024 Budget Speech in South Africa presents a balanced approach in a politically sensitive year. The government’s strategy of maintaining tax stability for individuals, while increasing revenue through targeted excise duties, reflects a tactful maneuvering in an election year to avoid voter discontent. The significant investments in social welfare and public services highlight a commitment to socio-economic development, which is politically prudent and socially necessary. However, the budget also raises questions about long-term fiscal sustainability and the need for broader tax reforms in the future. Business owners and individuals can take solace in the stability of the tax regime for the immediate future, but should remain cognizant of potential changes post-election. As South Africa navigates these economic and political waters, the effectiveness of this budget in balancing immediate needs with long-term goals will be closely watched and analyzed.
That’s a wrap on our summarised version of the budget.
If you want to read the whole budget speech and the more complete set of documents we’ve linked to those below for your convenience.
Download Budget Speech and Tax Guides Below
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