Tributum Newsletter #36
Hello
My previous boss told me that the energy at home changes when one of the kids leave the house, and he was right. Leaving the eldest in Potchefstroom now seems easy compared to walking past her room in the evenings knowing that the light will not be switched on for a while. Forget SONA, the big news in February was the national Budget delivered on 23 February, quickly eclipsed by the Russian invasion of the Ukraine…
But the Budget first. The R168 billion in tax collected above expectaion was a welcome injection, but remember it was fuelled by high commodity prices and better performing mining sector which does not indicate a permanent position. Some of that bonus is earmarked to reduce SA’s debt that remains of great concern as debt servicing costs account for about 20% of all Government expenditure. The balance of the windfall will largely be used to fund the 12-month extension of the R350 monthly unemployment grant.
If and how that will be funded from 2023 onwards remains to be seen. Especially taking into consideration a 1% reduction in the corporate tax rate from 31 March 2023. While other measures are planned to reduce the impact on tax revenue the corporate tax collections remain directly linked to economic performance. Without a growing economy and without growing profits corporate tax collections will remain under pressure.
Individuals will have some relief through the tax bracket creep, but sin taxes increased so any savings may well be spent there. For the first time since 1990 (yes 32 years!) there were no increases in the fuel levy or RAF levies. With oil prices hovering above US$100 per barrel all of us are already suffering at the petrol pump. This is already predicted to further increase on 2 March…
The increase is directly related to the war in the Ukraine and its effects on the oil price that further affects our inflation. Treasury can lead this horse to water, but others determine how much and when it drinks. Mike Tyson once said that everyone has a plan until they get hit in the face. The 2022 Budget seems like a good plan, but with COVID, war, crumbling SOE’s and political uncertainty the hits are expected to continue. Let us hope that the plan can adjust to cater for this. Time will tell.
On the eve of Tributum’s 3rd anniversary I would like to thank all the loyal clients, other supporters, friends and family that has made the journey worthwhile. Tonight, I will raise a glass to you, the reader, for sticking with us. Until next time, keep breathing.