Most people find the “Mini Budget” quite boring, which is why we’re keeping this report to the parts that will directly affect you and your pocketbook.
Tax increases are (almost) inevitable
Government needs to raise an extra R44-billion in taxes over the next three years. Our economy is tepid; where is this money going to come from? In his speech on Wednesday, Finance Minister Nene hinted at future tax increases, details of which will be in the 2015 Budget.
Raising personal income tax or corporate tax will have a severely damaging effect on our economic growth prospects and we can almost certainly forget about raising VAT. "We will not balance this budget on the backs of the poor!" said Nene.
Expect hikes to “wealth taxes” such as estate duty and capital gains tax.
The economy won’t grow much
Treasury has cut economic growth forecasts for 2014 from 2.7 percent to 1.4 percent. This is in line with the IMF that expects our GDP to increase by 1.4 percent and the South African Reserve Bank that expects growth at 1.5 percent.
Government to sell (some) silverware to fund Eskom
Finance Minister Nene expects R20-billion from sales of “nonstrategic assets” to capitalise Eskom, though he provided no specifics on what these assets might be.
In addition, Eskom will borrow a whopping R250-billion in the next five years.
Whether this will lead to a moderation in electricity price inflation only time will tell.
No bailout for SAA, SA Post Office
Tax payers won’t be expected to bail out South African Airways or the longsuffering SA Post Office.