2023 SA Budget Key Highlights — by Finance Minister Enoch Godongwana

Finance Minister Enoch Godongwana on Wednesday delivered the 2023 budget speech in Parliament, Cape Town

Finance Minister Enoch Godongwana on Wednesday delivered the 2023 budget speech in Parliament, Cape Town. His speech comes in the wake of the shocking severity of daily power outages and rising food prices, and prevailing socio-economic challenges

Godongwana provided details of spending and revenue collection proposals to implement these President Cyril Ramaphosa‘s plans outlined in the State of the Nation Address, earlier this month.

He announced government’s initial Eskom debt relief plan (R254 billion) and increased tax incentives for rooftop solar PV in the face of SA’s worsening power crisis.

Godongwana mentioned in the 2022 mid-term budget in October that the Eskom debt relief bill would be tabled in February’s main budget, while President Cyril Ramaphosa announced in his recent State of the Nation Address that solar PV incentives or tax support is on the cards to help mitigate the impact of load shedding on households and the economy.

As is customary for the main budget, sin taxes or excise duty on alcohol and cigarettes were increased “in line with expected inflation” at 4.9%. Latest inflation data from StatsSA came in at just below 7%.

To limit the impact of the energy crisis on food prices, he also announced that the diesel fuel levy refund will be extended to manufacturers of foodstuffs for a period of two years, from 1 April 2023 until 31 March 2025.

There were no tax increases for individuals. Government did however claim to be “granting tax relief” in Budget 2023 by adjusting personal income tax brackets and rebates to account for the effect of inflation.

Individuals will only pay income tax if they earn more than R95 750 annually.

Social grants have increased slightly below inflation. The Covid-19 Social Relief of Distress grant has been extended until 31 March 2024.

There, however, was no announcement on a permanent Basic Income Grant was made.

The sugar industry will also be slightly relieved, with no hike in “sugar tax” this year. The minister said that the increase of the health promotion levy on beverages to 2.3 cents per gram of sugar is being delayed until 1 April 2025.

Government has, however, not budged on the industry’s calls for the tax to be scrapped altogether.

In terms of government’s solar PV tax support, a tax rebate to individuals for solar PV panels of 25% of the cost for a limited period was announced. This is subject to certain conditions and will be capped at R15 000 per individual.

SA’s fiscal position and GDP forecast

Government’s fiscal position has improved, with the consolidated budget deficit expected to decline from 4.6% of GDP in 2021/22 to 4.2% 2022/23 and reach 3.2% of GDP in 2025/26.