Budget blues: From fuel hikes to more sin tax, get ready to tighten up
Finance minister Tito Mboweni delivered his 2019/2020 budget speech in Parliament on Wednesday, and the message is clear: South Africans will need to tighten their belts.
Here are four budget blues that will affect many.
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Public sector wage bill
Mboweni announced that the public sector wage bill will be cut by R37bn in the next three years through early retirement, natural attrition and no additional funds allocated towards salaries.
He said the wage bill is unsustainable and reducing it will give public servants the opportunity to retire early.
Business Day reported that early retirement of public servants could cost the government about R16bn over the next two years.
The government is also expected to remove performance bonus payments to cut costs.
Tax revenue
The tax revenue shortfall for the 2018/2019 fiscal year is estimated at R42.8bn, which is R15.4bn more than what was estimated in the medium-term budget.
According to Mboweni, about half of the increase in the revenue shortfall since October was due to “higher-than-expected” VAT refunds.
BusinessDay reported that corporate income tax is estimated to yield R21bn less than the R773bn projected in the 2018/2019 budget, personal income tax R8.4bn less than the R505.8bn projection; VAT R22bn less than the R348bn forecast; and the fuel levy R2bn below the R77.5bn estimate.
Sin tax
Mboweni announced an increase in excise duty on alcohol products and cigarettes.
Excise duty on a can of beer will go up by 12c to R1,74; 750ml of sparkling wine will go up by 84c to R10,16; a 750ml bottle of wine will increase by 22c to R3,15; and a bottle of whiskey will go up by R4,54 to R65,84.
The duty on a pack of 20 cigarettes will increase by R1,14 to R16,66.
Motorists will suffer further blows, as there are more fuel price hikes ahead.
Mboweni announced that the price of petrol will go up by 29c a litre, with diesel increasing by 30c a litre in April.