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The Budget in a Nutshell

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The 2021 Budget Speech

If there was a SA Budget Speech to watch, it was certainly this one, short and to the point and not really filled with any surprises.

Economic Outlook

The following outlook is straight from the 2021 Budget speech made by By South African Finance Minister Tito Mboweni:

Global economic growth is expected to rebound to 5.5 per cent in 2021 before moderating slightly to 4.2 per cent in 2022, buoyed by the expected rollout of Covid-19 vaccines and other additional policy initiatives. 

China is expected to grow at 8.1 per cent in 2021, while India will achieve a growth rate of 11.5 per cent in 2021 while Sub-Saharan Africa is forecast to grow by 3.2 per cent. 

In this context, the South African economy is expected to rebound by 3.3 per cent this year, following a 7.2 per cent contraction in 2020 and average 1.9 per cent in the outer two years.

Taxation Highlights

Most analysts were spot on in expecting an income tax increase as we have seen the largest shortfall in tax collection in history. SARS is expected to collect R1.21 trillion in taxes during 2020/21, about R213 billion less than our 2020 Budget expectations.

Tax brackets will see an above inflation increase generating around R2.2 billion of income for Government. Value-added Tax (VAT) to remain at 15% on the supply of goods and services by registered vendors.

Sin taxes are also increased on tobacco and alcohol by 8% and an Inflation-related increases of 15c/litre and 11c/litre will be implemented for the general fuel levy and the RAF levy, respectively.

"Tax on the following delights have increased":

  • Can of beer: will cost an extra 14c.
  • 750ml bottle of wine: 26c increase.
  • 750ml bottle of sparkling wine: 86c increase.
  • A bottle of 750 ml spirits, including whisky, gin or vodka, will rise by R5.50
  • A packet of cigarettes: 1.39c

Corporate income tax

The finance minister also stated that the corporate income tax rate will be lowered to 27% for companies with years of assessment commencing on or after 1 April 2022.

Click this Budget 2021 Tax Guide from SARS to see all the relevant rates.

Government grants

We can expect a R30 increase for the old age, disability, and care dependency grants to R1890 and a R30 increase in the war veterans grant to R1910.

Child support grants will see a R10 increase to R460 as well as a increase for foster care grants of R10 increasing the grant to R 1050.

The complete budget can be found at the National Treasury for a more comprehensive look into the 2021 budget speech.

Sources – EasyResearch, National Treasury, Fin24

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