In a nutshell, there are three significant changes to the budget:
- Eskom was expected to get a massive bailout from government. Instead, it will get financial support of R23 billion a year over the next three years, with conditions attached. Finance minister Tito Mboweni said giving money to Eskom in its current form was like throwing water into a sieve, and he would not do that.
- No personal income tax increases were made but one was snuck in through the backdoor by raising the tax-free earning threshold. If you are a tax payer, earning more than R79 000 a month, you will pay more taxes. This is because government is not adjusting the income tax bracket for inflation, in order to rake in another R12 billion in revenue.
- Government is on a saving spree. It’s going to offer thousands of civil servants early retirement to save on salaries, and all national and provincial ministers and members of the legislatures will not get a salary increase this year.
What does it mean?
It means we are in trouble. Government has to find more and more inventive ways to find money, and taxpayers are going to feel it.
It also means Mboweni is taking a hard line with Eskom, and refusing to throw good money after bad.