Impact of the new Budget on consumers

CONSUMERS can look forward to the increases in pension and social grants remaining that were announced in the Finance Minister Enoch Godongwana’s previous Budget in March. However, experts warned that there will be bumps in the road in the future.

- ASHLEY LECHMAN

Hayley Parry, a money coach and facilitator at 1Life Insurance Truth About Money, told Business Report that it would appear that government is still kicking the proverbial can down the road in terms of not making some of the hard choices that some of the opposition political parties suggested.

“We are seeing that in terms of debt servicing costs, which are sitting at 22 cents out of every rand of revenue that we receive. This means that it’s going to be tough for government to find the money that it needs for the expenses, if not this year, then most definitely next year. From a consumer perspective, however, we have seen that a number of the announcements made in the March budget remain the same. However, there are a couple of changes,” Parry said.

“On the positive side for consumers, we have seen that VAT is going to remain at 15% instead of being increased. Things like the pension and social grant increases that were announced in March have also been retained. The announcement of an expansion of the zero-rated basket of goods that has been removed, there is also still no adjustment to personal income tax brackets or medical tax credits.

“In addition to that, what we didn’t see in March — that has been added in order for the government to recoup a little bit more money into the coffers — is that a fuel levy increase has been announced from June 1. There will be 16 cents per litre increase on petrol and 15 cents per litre increase on diesel,” Parry added.