Budget Speech 2015: What it means to your budget

“In summary, the main focus of the budget speech was centred on promoting economic growth through incentivising small business. This will be funded by cutting back government expenditure while increasing tax revenue.” By Chris Blair, MEDO Chairman and 21st Century Pay Solutions Group CEO
True to his word in the Medium Term Budget Speech (October 2014) Minister of Finance Nhlanhla Nene focussed the 2015 Budget on reducing costs and the time has come to raise tax revenue. He indicated that the savings that South Africa had accrued during the good economic times – which preceded the global financial crisis – had been used to shield South Africa from increased taxes in recent years. Bad news – the economic growth forecast for South Africa in 2015 has been revised downwards from 2.5% in October 2014 to 2%. This has been as a result of the disruptions in the power supply which have led to load shedding and loss of productivity. The Minister announced that increasing and stabilising the power supply are among the priorities that have been outlined in the Budget (a loan of R23 Billion granted to Eskom). Good news – improving service delivery has also been included in the priorities listed, via improved efficiency rather than employing additional staff. The additional revenue required in order to finance government’s expenditure and reduce the budget deficit will come from a number of sources, mostly impacting you, the individual consumer. Income tax for all employees earning more than R181 900 per annum will increase by one percentage point. This may seem somewhat regressive in that those who pay 25% would earn feel the 1 percentage point increase more than those at the 40% for example. However, Minister Nene announced that this increase combined with the inflation adjusted increase in the medical tax credit and primary rebate would result in net tax relief for anyone earning below R450 000. For those who live in Gauteng, the “user must pay” principle is scheduled to continue as the chief source of funding for the Gauteng Freeway Improvement Project. Government announced that it would assist in the funding of the debt and details as to the amount would be announced this year. E-tolls are not necessarily going away! This in conjunction with increased fuel taxes, depreciation of the rand against the dollar and the expected rebound of the oil price in the coming months means that transport costs are going to go up significantly. The fuel tax will increase by 80.5 cents cumulatively; 50 cents per litre allocated to the Road Accident Fund and 30.5 cents allocated to the fuel levy. The electricity levy will increase from 2.5 cents per kilowatt hour to 5.5 cents per kilowatt hour for the duration of the supply shortages. Minister Nene also stated that Eskom would approach the National Energy Regulator of South Africa (NERSA) to ask for a higher electricity price per unit. “Sin taxes” are to increase as usual with a beer costing 15.5 cents more per bottle, while wine increased by 15 cents per bottle and spirits by R3.77 per bottle. The increase in the “sin tax” per pack of 20 cigarettes will be 82 cents. When all of the above taxes are added up the, it is clear that consumers will have to tighten their belts in 2015 as a result of these increased cost pressures. Small business was handed a boost by the more generous tax regime for businesses with a turnover under R1 million. Companies with a turnover under R335 000 will not pay any tax while the maximum rate would be reduced from 6% to 3% in order to assist small business development. Apart from this, the rest of the company’s tax regime (already high by world standards) remains unchanged. In summary, the main focus of the budget speech was centred on promoting economic growth through incentivising small business. This will be funded by cutting back government expenditure while increasing tax revenue.
How the budget speech affects you: Middle and higher income groups – an additional 1 percentage point in income tax. All consumers including the lower income groups – increased fuel and transport costs and electricity costs resulting in knock-on price increases. It looks as if it will be a year in which consumers will have to trim excess spending in order to compensate for increased prices.

Chris Blair, MEDO Chairman and Chief Executive Officer of 21st Century Pay Solutions Group (Pty) Ltd, has consulted to over 500 organisations – both in Southern Africa and internationally. Chris holds a BSC Chem. Eng. and MBA in Leadership & Sustainability and is registered as a Chartered Human Resource (CHR) Practitioner with the South African Board for Personnel Practice (SABPP). He is also accredited as a Master Reward Specialist through the South African Reward Association (SARA). Areas of specialisation include incentive schemes, cost benefit analysis, financial modelling, breakeven analysis, feasibility studies, shareholder value, performance management systems, salary structures, total cost of employment, share schemes, organisation design and policy development. He is considered to be one of South Africa’s leading experts in share scheme design for both listed and unlisted companies. Chris has published numerous articles on remuneration and he has appeared in the press for expert views on the subject.

Trackback from your site.


  • 2015-01-29_6589491
  • Abraham-from-Learning-e-Varsity-300x300
  • CT-Tour-300x300
  • City-of-Cape-Town-micro-development03-300x300
  • DSC_3385
  • DSC_5119
  • DSC_8530-2-2
  • Entrep-ebsite-4-300x300
  • Entrep-website-2-300x300
  • Entrep-website1-e1412757840779-300x300
  • HRH-Charles-with-MEDO-Mobile-300x300
  • Helen-copy-300x300
  • I-need-ESD-300x300
  • IMG_1762
  • IMG_1921
  • IMG_5943-300x300
  • Im-a-Trep-300x300
  • JHB-Training4-300x300
  • JHB-Training4
  • Jeff-and-Dame-Nicola1-300x300
  • Jeffrey-Malaudzi-Mulaudzi-Alexandra-Tours-300x300
  • Jenni
  • Josais-2-300x300
  • Judi-Sandrock-2011-copy
  • MCC-Vic-300x300
  • MEDO-Mobile-side-300x300
  • MEDO-Treppie-300x300
  • MEDO-Youth-ICT-Incubator-Launch-Cutting-Ribbon-300x300
  • MG_4618
  • Mlungiseleli-from-Kini-Quantity-Surveyors-300x300
  • Nhlanhla-300x300
  • Ntsiki-ngwenya-300x300
  • Pascal-from-Polamco-300x300
  • SDP-Morningside33-300x300
  • SDP-Treps03-300x300
  • SDP-Treps23-300x300
  • TREPPIE-PE-GOODIES13-300x300
  • _DSC1395-2-2
  • _DSC2113-2-2
  • _DSC2299-2-2-2
  • _DSC2564-2-2
  • _DSC4270-2
  • _DSC4631-2
  • craig
  • deenin-from-Little-Thinker-300x300
  • entrep-website-3-300x300
  • fathima
  • isuzu-300x300
  • kaya-300x300
  • open-content-300x300