THERE was no relief for the man in the street when Finance Minister Nhlanhla Nene delivered his much-anticipated 2015 budget speech yesterday (Wednesday).From sin tax and fuel levy increases to personal income tax hikes, the populace’s wallets will experience considerable shrinkage.
Economists nationwide have emphasised that the Minister had little choice but to implement a strategy to close the large gap between national spending and revenue. Currently SA’s debt trend is unsustainable while the country’s GDP figures battle to grow.
Nene announced that his department will address the country’s sluggish economy and troubling deficits by addressing the Eskom power crisis, labour disputes and unemployment.
‘Our primary challenge is to deal with the structural and competitive challenges that hold back production and investment in our economy. The most important of these is the security and reliability of energy supply,’ Nene said.
Power to the people
A significant slice of the budget cake has been set aside to solve the electricity crunch.
‘Electricity constraints hold back growth in manufacturing and mining, and also inhibit investment in housing and raise costs for businesses and households.
‘For this reason, our projected economic growth for 2015 is just 2 percent, down from the 2.5 percent target in October. We expect growth to rise to 3 percent by 2017.
‘Higher growth is possible if we make good progress in responding to the energy challenge or if export performance is stronger. The best short-term prospects for faster growth lie in less energy-intensive sectors such as tourism, agriculture, light manufacturing and housing construction,’ Nene added.
Deputy Dean in the Faculty of Commerce, Administration and Law at the University of Zululand, Dr Irrshad Kaseeram, said Nene has paved the way for the country to trek away from the deficit precipice.
‘Now government needs to execute his plan to reduce the deficit to 3% of GDP by 2017,’ Kaseeram said.
‘Skilful action is needed to rein in spending and raise taxes moderately so as not to squeeze private spending significantly.’
Personal income tax rates will be raised by one percentage point for all taxpayers earning more than R181 900 a year.
Paying for your ‘sins’
Nothing in life is as certain as death and ‘sin’ taxes.
As usual, smokers and drinkers will again cough up more to enjoy their habits.
Taxes on tobacco purchases will be spiked by 82 cents per packet of 20 cigarettes in April.
A bottle of wine will cost 15 cents more, sparkling wine 48 cents and whisky R3.77.
The tax on a quart of beer goes up by 15.5c
Fuel levies
As expected by economists, fuel levies will see a sharp increase after the fall in oil prices since last year.
Nene announced that the fuel levy is to increase by 80.5c per litre from the start of April – an increase of 30.5c per litre on the general fuel levy and another 50c to assist the struggling Road Accident Fund.
