2024/25 Budget Review

Written on 21/02/2024
Nexia SAB&T

The Minister of Finance, Mr. Enoch Godongwana, tabled his budget review on 21st February 2024. While tax revenue performed well in 2021/22 and 2022/23 due to high commodity prices, revenue for 2023/24 is now expected to fall short by R56.1 billion. Government has proposed tax increases totalling R15 billion in 2024/25 to alleviate immediate fiscal pressures, while limiting the impact on economic growth. The following were the key tax proposals:

  • Personal income tax
    • No change to personal income tax brackets, rebates, and medical tax credits.
  • Excise duties
    • Increase in excise duties of between 6.7% and 7.2% on alcohol products, and between 4.7% and 8.2% on tobacco products.
  • Fuel and RAF levies
    • No change to the general fuel levy and road accident levy.
  • Climate and environment 
    • The introduction of an electrical and hydrogen-powered vehicle tax incentive, enabling manufacturers to claim 150% of qualifying investment spending, to be introduced from 1 March 2026.
    • Plastic bag levy to increase from 28 cents to 32 cents per bag from 1 April 2024.
  • Learnership tax incentive
    • To be extended by three years to 31 March 2027.
  • Retirement funds
    • Two-pot retirement reform, which enables pre-retirement access to a portion of one’s retirement assets, to be implemented on 1 September 2024.
  • Global minimum corporate tax
    • Multinational corporations to be subject to an effective minimum tax rate of 15%, regardless of where profits are located, from 1 January 2024. 

Over the next three years, tax revenue is expected to grow by R401.7 billion, reaching R2.13 trillion and a tax-to-GDP ratio of 25.3% in 2026/27. However, this will require a combination of prudent tax increases, improved tax compliance and strengthened revenue administration. Most importantly, it will require a commitment to economic growth and long-term base-broadening initiatives - as Mr. Godongwana stated in his speech, “the size and quality of the national pie is what informs, and ultimately determines, the realisation of our political imperative of redistribution."

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