There seems to be some good and bad news in Finance Minister, Tito Mboweni’s recent 2019 budget speech.
To break it down for you and according to Susan Steward from Budget Insurance, the bad news is that …”Daily living will become more expensive this year, and consumers are going to feel the pinch when filling up their cars, buying tobacco and alcohol and indulging in sugary drinks”.
The good news is that government is looking to allocate funds for the good of society, particularly in the fields of education, entrepreneurship, health, housing and fighting poverty.
Bad news breakdown courtesy of Budget Insurance:
• Petrol and diesel: The fuel levy on petrol and diesel went up by 29 cents and 30 cents respectively. The Road Accident Fund levy went up by 5 cents per litre of fuel, despite the Minister saying the levy won’t cover the R215 billion liability. This comes into effect in April. A carbon fuel levy of 9 cents a litre on petrol and 10 cents on diesel will come into effect in June. In addition, there is expected to be a petrol price increase in March (petrol is expected to rise by another 43 cents per litre, diesel by another 62 cents per litre). That means, by the middle of the year, motorists will be paying about R14,94 per litre of petrol and R14,22 per litre of diesel. A car with a 50 litre fuel tank will cost about R747 (petrol) and R711 (diesel) to fill.
• Tobacco and alcohol: Smokers will be forking out more to support their habit. The price of a pack of 20 cigarettes will increase by R1,14 and excise duty on a typical cigar will go up by about 64 cents. Wine lovers will pay 22 cents more for a 750ml litre bottle and sparkling wine will cost an extra 84 cents, while 340ml cans of beer will cost an extra 12 cents each. There will be no tax on sorghum beer. The biggest increase was whiskey – up by R4,54 for a bottle. The increasing sin taxes might cause consumers to opt for cheaper substitutes, including illicit cigarettes or alcohol. If your monthly household budget cannot cover the increases on these items, it is best to either cut down or quit, rather than compromise your health with inferior products. This might end up costing you more in medical bills in the long-term.
• Sugar tax: Introduced last year, the sugar tax will increase from 2,1 cents per gram above 4 grams, to 2,21 cents per gram.
With these increases in mind, Budget Insurance recommended five things to consider when reviewing your monthly budget.
They are:
1. To draw up a budget, start with a list of fixed expenditures and other monthly deductions. Have a careful look at what you are spending your money on and identify where you might be “leaking” cash on non-essentials like take-aways, entertainment and satellite TV, as well as on essentials such as your cellphone, groceries and transport. Once you have pinpointed areas where you could be spending less, start cutting back.
2. Get creative when looking for ways to cut back on costs. For instance, you could establish lift-clubs to save money on petrol and encourage your family to switch off lights in unoccupied rooms to save on electricity costs.
• If repayments on your vehicle, maintenance and fuel are eating up a third of your income every month, then it is time to reconsider whether or not to downsize.
• Being under-insured is one thing which can drastically increase your expenses despite your best budgeting intentions. This is especially true for items which we tend not to insure but are in fact high risk, such as cellphones, laptops and home contents. At the same time, being over-insured is also costly, so go through your various policies and be clear on the type of cover you pay for each month.
• Put away your credit cards. Don’t carry them around in your purse or wallet as you might be tempted to spend. Rather carry a debit card for everyday purchases and save up for the more expensive things you want.
Good news breakdown courtesy of Budget Insurance:
• Education: Over R30 billion is allocated to building new schools and maintaining schooling infrastructure.
• Health: To increase the staff complement of doctors and nurses in the public health sector, R2,8 billion has been allocated to a new human resources grant and R1bn for medical interns.
• Entrepreneurship: R481,6m was allocated to the Small Enterprise Development Agency to expand the small business incubation programme.
• Housing: A R950m subsidy has been allocated over three years to assist first-time home buyers when purchasing a home.
• Fighting poverty: Government has allocated R567bn for social grant payments to assist the elderly and those drawing child support.
