The much-anticipated 2019 Budget Speech created a renewed a sense of optimism for all South Africans. With focus on accelerating economic growth; the budget alluded to creating room for a prudent approach to expenditure, stabilising and reducing debt, reconfiguring state-owned enterprises and managing the public-sector wage bill.
However, the effects for the man on the street cannot be ignored. Ester Ochse, Financial Advisory, FNB Wealth and Investments says that “Consumers should anticipate a few speed bumps this coming year. Normally, South Africans get slight inflation relief for Personal Tax but none of this came through in the Budget Speech. Pressure is on for consumers to manage household and personal spending and ultimately saving more.”
Other key focus areas include:
Retirement: No changes were made to retirement for South Africans. “Your retirement is important and should not be ignored or left for to too late. Continue prioritising and saving for retirement as this will benefit you in your golden years.”
No increase on tax brackets: Key personal income tax proposals saw government increase the personal income tax threshold from R78 150 to R79 000. Income brackets were left unchanged and neither were they adjusted for inflation for the first time since 1990.
There was also 29c increase in the fuel levy for petrol and diesel. “This will increase what consumers spend on fuel. Start looking ways to reduce fuel consumption, by ensuring that your car is properly serviced, ensure tyres are properly inflated and maintained. Alternatively consider use carpooling or public transport,” says Ochse.
Sugar Tax and Excise duties on alcohol and tobacco were increased in this year’s budget. Ochse says that “Consumers should think about saving more and focus on enhancing their financial wellness and living a healthier lifestyle.”
Improvement of the education system by developing the skills that are needing to drive economic growth. Learning and culture received the largest share of spending as access to quality basic and higher education, developing skills and providing adequate training is a priority. “Parents should budget and ensure that they continue saving and investing for their children’s education. Take active steps and ensure that your children are covered,” says Ochse.
ngoing savings should be a focus for you and your family. “Consider looking at savings vehicles that will help you save more like a Tax-Free Savings Account. It’s never too late to save, so start now and ensure that you are financially secure for the future. These initial steps will help in your wealth creation journey,” concludes Ochse.