Cape Town — South Africa’s Finance Minister Enoch Godongwana delivered his 2023 budget to parliament today, against a backdrop of world economic decline, the effects of Covid-19 and the increasing impact of load shedding on the country.
Among measures announced by the minister, is the bailout of Eskom to the tune of R248 billion – halving the over R400 billion that the utility accrued in debt.
“We are tabling the 2023 Budget in a difficult domestic and global economic environment. The global recovery is slowing. Domestically, load-shedding has become more persistent and prolonged, impacting on service delivery and threatening the survival of many businesses. This is compounded by disruptions to freight and logistics networks. Households are under pressure from the rising cost of living, and unemployment remains stubbornly high. We are navigating this difficult environment with policies that support faster growth and address fiscal risks”, the minister said.
On the burning issue of load shedding, there is good news for businesses and individuals, with the minister announcing tax incentives to encourage renewable energy investment.
From March 1, 2023, businesses can reduce their taxable income by 125% by investing in renewables, with no thresholds on the size of the projects that qualify. The incentive will be available for two years.
Renewable energy incentives come after President Cyril Ramaphosa’s announcement that new tax incentives will also be introduced for individuals to install rooftop solar panels – a measure that will see more households enjoy reliable energy supply while also reducing pressure on the national grid. Individuals who install rooftop solar panels will be able to claim a tax rebate of 25% of the cost of the panels, up to a maximum of R15,000, from March 1, 2023. This incentive will allow households to reduce their tax liability in the 2023/24 year, and will be available for one year. Solar-related loans will also be boosted for small and medium enterprises on a 20% first-loss basis, the minister said.
Since the Covid-19 pandemic, there has been increasing calls for the government’s R350 social relief grant to the unemployed to be increased. The 2023 Budget document indicates that the expenditure on social grants will increase from R233 billion in 2022/23 to R248.4 billion in 2025/26 due to increases in the number of recipients and the value of the grants. The minister said that R30 billion will be used for inflation-linked increases for other social grants – including old age pensions.
The old age and disability grants increase by R90 on April 1, 2023, and a further R10 on October 1, 2023. The result is a total increase to R2090, the minister said.
The sin tax on beer, wine and cigarettes has once again not been spared – beer will now cost 10 cents more, and a 750ml bottle of wine 18 cents more, a 750ml bottle of spirits is to increase by R3.90, a 23g cigar is going up by R5.47 and a pack of 20 cigarettes by 98 cents.
The country’s struggling sugar sector received a reprieve. “Due to the difficult operating environment for the sugar industry from the impact of flooding and social unrest, the health promotion levy will remain unchanged for the following two fiscal years to enable the industry to diversify or restructure,” the minister said.
Read the full budget speech here.
