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Minister of Finance Enoch Godongwana will be presenting the country’s budget for the upcoming fiscal year in Parliament at a sitting of the National Assembly at the Cape Town City Hall tomorrow, 21 February 2024.

With humiliating downgrades from credit rating agencies, runaway government debt, and a catastrophic deficit of 6% of our GDP, Minister of Finance Enoch Godongwana is likely to make us all weep a little come Wednesday evening.

The 2024 Budget Speech falls right before a national election, which makes it even harder for the minister. Comments such as “brace for financial challenges,” are the last thing a government wants to tell voters, but we’ve come to the eye of the needle, and someone will have to get knee-capped before we pass through. Odds are it is the taxpayer.

The 2024 Budget will present an overall look at the state of the country’s finances, amendments to tax, spending plans for the upcoming fiscal year, distribution of revenue across government and distribution of expenditure across national departments.

Budget-watchers say the government will be reluctant to increase income tax for low and middle-income earners, but interest rates and good old VAT are in the wings along with fuel levy taxes and the much talked about R500 billion Gold and Foreign Exchange Contingency Reserve Account, fondly called the ‘money pot’.

The R500 billion reserve, overseen by the South African Reserve Bank (SARB), is made up of gold and foreign exchange reserves and is held as a backup plan to ‘ensure financial market stability’ or meet any ‘unanticipated economic issues’.

However, while analysts have been pointing to the reserve as a potential rescue bouy since mid-2023, they have cautioned that it must be used to address South Africa’s mounting debt, not to pay for additional government spending. Or worse, quietly disappear into the bureaucratic ether.

The minister will have to walk a tightrope as he asks more of South Africans while trying to explain why the cost-cutting measures put in place are not working. Asking taxpayers for more water when your bucket is still full of holes is a bit cheeky, but such is the lot of a finance minister in South Africa.

While the budget is a snapshot of all the big plans, most of us will be affected by the tiny details that don’t fit into a soundbite, so to ensure you comply with the fallout from this budget speech, we recommend you leave it in the hands of people with extensive knowledge of tax legislation, like our partners at 123 Consulting.

123 Consulting has experts in every specialisation – from tax to management accounting to internal audits – so no matter what Minister Godongwana throws at us, we’ll let them soften the blow for us.

[source:enca&pmg]