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The 2024 Budget Speech

Budget Shortfall headache – is it more of a migraine?

Being an election year, the anticipation for the annual Budget Speech was amplified as we all tuned in to eNCA at 2 pm on Wednesday, 21 February. Personally, when comparing last year’s Budget Speech, I sensed that Finance Minister Enoch Godongwana’s delivery was somewhat strained.

The pressure is on with an all too familiar backdrop of load shedding, an all-time high unemployment rate, slow economic growth due to poor infrastructure and rising government debt.

The onerous government debt took centre stage, and Enoch Godongwana began his address by announcing the reform to release R150 billion worth of the South African Reserve Bank’s Gold and Foreign Currency Exchange Contingency Reserve Account (GFECRA).

The GFECRA is essentially the unrealised foreign exchange gains/profits on South Africa’s foreign exchange reserves held by the South African Reserve Bank. The depreciation of the rand means this reserve account now stands at approximately R500 billion. Unlike the rest of the world, there has not been a regular transfer of these gains from the central bank to the government. The last transfer occurred in 2003. This contingency reserve account is seen as a stop-gap, ‘savings for a rainy day,’ so to speak, and is not intended to be a reoccurring source of funds for Treasury to relieve pressure.

The intention is to use this R150 billion over the next three years to reduce government debt, which is currently 75% of our Gross Domestic Product (GDP). It is important that the South African Reserve Bank’s operational independence remains intact. Another important point to note is that this is not repayable by Treasury to the Reserve Bank.

In turn, by reducing government debt, theoretically, funds will be freed up to contribute more towards the public sector wage bill, SOEs, NHI, social grants and old age grants.

The budget deficit is how much spending exceeds revenue (tax collections), which is currently standing at R347.5 billion. This is due to the high cost of government debt, increased government spending (including SOE bailouts) and tax collections for 2023/2024, being R56.1 billion below expectations, which is largely attributable to the decline in corporate profits, particularly in the mining sector.

There has been no extension of the 2023/2024 solar rebate for individuals. Government are introducing a new R2 billion conditional grant over the medium term to fund the rollout of smart prepaid meters. This will begin with municipalities that have been approved for debt relief. All with a view to ease the electricity crisis and aid economic growth.

To encourage the production of electric vehicles in South Africa, producers of electric vehicles will be able to claim 150% of qualifying investment spending from 2026 as an incentive to aid the transition to new energy vehicles.

Here is a summary of the other pertinent points of the Speech:

Personal income tax

For the first time in a very long time, there are no inflationary adjustments to the personal income tax brackets. This means that there is no relief provided for tax bracket creep.

Tax threshold

This refers to the amount of income that you can earn before you need to pay tax. The thresholds have remained as is:

  • If you are under the age of 65, your yearly tax threshold is R95 750
  • If you are between 65 and 75, the threshold is R148 217
  • If you are 75 or older, the threshold is R165 689

No adjustments to medical aid tax credits

Medical tax credits have remained as is:

  • R364 per month for the first two members
  • R246 per month for each additional dependent


Treasury has allocated R1.4 billion to NHI, demonstrating a commitment to this policy. Much work needs to be done, such as building a national health information system, upgrading health facilities, and improving the quality of care, to name a few.

Retirement fund contributions

The tax treatment for contributions to retirement funds remains unchanged and is limited to 27.5% of the greater of the amount of remuneration for PAYE purposes or taxable income. The dedication is further limited to the lower of R350 000 or 27.5% of taxable income before the inclusion of a taxable capital gain. Any contributions exceeding the limitations are carried forward to the following year of assessment.

Two pot system

Contributions to retirement funds will be split, with one-third going into a “savings component” and two-thirds going into a “retirement component”. From 1 September 2024, the first cash withdrawals could be made from the savings pot.

Foreign exchange

The offshore investment allowance remains at R10 million per adult person per calendar year. In addition, the R1 million single discretionary allowance per calendar year remains.

Tobacco and alcohol

Excise duties will increase between 6.7% and 7.2% for alcoholic beverages and between 4.7% and 8.2% for tobacco.

A packet of cigarettes will cost an additional 97 cents, and a can of beer will cost 14 cents more. A bottle of wine will cost 47 cents more, and sparking wine will cost 89 cents more. A bottle of spirits, including whisky, gin or vodka, increases by R5.53.

Fuel levy

To provide some relief to households ( a silver lining), there once again has been no increase to the general fuel levy on petrol and diesel for 2024/25. There will also be no increase in the Road Accident Fund levy.

Environmental Taxes

Carbon tax is increased from R159 to R190 per tonne of carbon dioxide equivalent.

The carbon fuel levy will increase to 11 cents per litre for petrol and 14 cents per litre for diesel, effective from 3 April 2024.

The plastic bag levy will increase to 32 cents per bag from 1 April 2024.

Global Minimum Corporate Tax

Multinational corporations with annual revenue exceeding €750 million will be subject to an effective tax rate of at least 15%, regardless of where their profits are generated.

The following taxes remain unchanged:

  • Tax-free savings account contribution
  • Dividends Withholding Tax
  • Retirement and withdrawal tax tables
  • Foreign employment income
  • Capital Gains Tax (CGT)
  • Estate Duty
  • Donations Tax
  • Transfer Duty
  • Sugar tax
  • Value-added Tax (VAT)
  • Corporate income tax
  • Interest exemption


“A crude distinction between economics and politics would be that economics is concerned with expanding the pie while politics is about distributing it”. Alberto Alesina and Dani Rodrik

It was a tough, yet responsible budget speech indeed, and quite brave to present it in an election year.

Key Takeaways from the 2024 Budget Speech