So, the budget speech happened and it was a doozy. Remember when we started talking about it back here? We thought the biggest things to happen would be new taxes, higher taxes, bigger grocery bills, a lower interest rate, and static (if not worse) unemployment figures. And then the speech happened and among other things, our government made a surprising announcement. It seems that they’ve decided to decrease the public wage bill instead of choosing to squeeze South African taxpayers even more in order to reduce the budget deficit. As a result, the public wage bill will be cut by just over R160 billion over the next 3 years. Also, they promised to slash their unnecessary expenditure wastage, like cellphone usage and travel arrangements.
Which is always nice to hear… But what does this mean for you, and you, and you, and that other chap behind you?
We’ve broken down what we think will have an impact on most, if not all, South Africans.
Starting with… Personal income tax
Above-inflation increases were announced for income tax brackets and tax rebates, which sounds great if you’re into economics. For those who aren’t reading the Financial Times over their morning cuppa, this means that individuals will pay less income tax. By way of example (and so that we can all enjoy this announcement a little more) this means that if you earn say, R22,000 per month, you could save approximately R1,500 in tax per year.
Add in our decreasing car insurance premiums or multiple car discount (or both) and you’re on your way to some major savings by the end of the year!
Now let’s talk investments
It was also announced that the annual contribution limit to ‘tax-free savings accounts’ would be increased to R36,000. This is an increase of R3,000 from 2019 and means that you can put away more of your hard-earned casheroo sooner and benefit from compound interest. The lifetime contribution limit remains at R500,000.
If you’re wondering what ‘compound’ means, we’ve got a nifty explanation of how compound savings works when you take our car insurance (the 1 with the monthly decreasing premiums) which should help you out.
The deal with transfer duties
Thinking of selling your property? You’re in for some good news, because there’s been an increase in the threshold for paying transfer duties on the sale of property. Even better, properties costing less than R1 million (up from R900,000) will now be exempt from transfer duties!
To help you sell your house quicker, we’ve nailed down some ridiculously helpful tips over here.
Are there any people on the losing end?
Unfortunately, there are some people who’ll definitely feel a bit unloved this year, and this includes motorists and those who consume alcohol and smoke cigarettes. We can tell you that you’ll pay R2.89 per bottle of spirits, 14c more for a standard bottle of wine, and 8c more for a can of beer. Also, smokers can look forward to paying 74c per pack of cigarettes, with plans in the works to tax e-cigarettes in 2021.
Now, let’s talk to the motorists, because that’s a lot of us, yes? Yes. The first sting is the increased fuel levy. The fuel levy has been increased for the last few years on the bounce and according to the AA, ‘Such an increase this year will be more than detrimental, it could be catastrophic’.
So there’s that punch to the budgets of a lot of South Africans. And then there’s also potential VAT hikes, which could also make motoring more expensive. Supposedly we’ll see VAT rise by another 1%, which takes us to 16% and could have a negative effect on the way fuel is priced in South Africa. This kind of makes it important for us all to examine our budgets, reconsider how much we’re spending on items affected by these increases, and make a few switches to save.
And what better place to save, as a motorist, than on your car insurance?