It's budget time again, and the National Treasury has announced its plans for the 2014/15 financial year. What does this mean for you?
Tax tax tax
Taxes have come down again! Nobody ever complains about that. A total tax relief of R9.3 billion has been announced with 56% of this going to those who earn below R350,000 a year, or around R29,000 per month. In fact this year, if you are below 65 years of age and earn less than R70,700 per year (about R5,900 per month), you won't even qualify for tax.Drinking and Driving
Drinking and driving at the same time is always a terrible idea, but even if you do them separately you are going to feel the burn this year. The fuel levy has been raised by 12c per litre and the Road Accident Fund by 8c per litre. Taxes on a can of beer will increase 9c, a bottle of wine will go up 13c, and a 750ml bottle of spirits will go up a whopping R4.76. The smokers have not been forgotten, and tax on a pack of 20 will now be 68c higher.The macro stuff
On a more macro level, this year's budget will bring benefits to you through increased spending on services and infrastructure. Money has been allocated to the rebuilding of schools and greater access to education, improving the quality of hospitals, and better incentives to employers to create jobs. A large proportion goes to economic infrastructure spending, such as the R11 billion set aside to improve the railways.The global influence
The challenge however, is that South Africa is not an island. According to the predictions of the Treasury, and a result of the United States slowing down its policy of money injection, as well as a reduced global demand for commodities (SA's greatest source of foreign exchange), the rand is likely to remain weak and volatile. GDP growth will be slow and is forecast at only 2,7% for 2014. Interest rates both globally and in South Africa are likely to increase.
All taken into account, the economic situation in South Africa is likely to improve, but in order to take advantage of this you must structure your work and financial situation carefully. It is not a good time to be in debt, as earnings will be low while interest rates will rise. If you do take out a loan or buy on credit, make sure that it is for an investment or personal growth, and not for unnecessary consumption.
The 2014 budget shows a good foundation to make sure all South Africans are supported during tough times. But, it is going to take a lot of work from everyone over the next few years before we can crack open the champagne.Looking for a simple way of understanding the Budget speech? GetSmarter has produced an infographic to summarise the 2014/15 National Budget that doesn't involve wading through pages of finance speak. View the 2014/2015 National Budget infographic here.