No new taxes to be announced in South Africa's 2021 budget

Written By: Kalden Ongmu WION
Johannesberg, South Africa Published: Feb 24, 2021, 11.29 PM(IST)

South African currency Photograph:( Reuters )

Story highlights

This year’s budget comes at a difficult time when the country is trying to adjust its economic cracks after a severe Covid-19 lockdown. It also comes as the country prepares for the biggest vaccination programme in history.

South African tax payers can breathe a sigh of relief as the finance minister in his 2021 budget announced they would not introduce any new taxes this year.

“We agree that tax increases must be kept to a minimum as we stabilise our public finances. We have chosen not to introduce the tax measures initially proposed in the October Medium Term Budget Policy Statement (MTBPS),” Tito Mboweni said. 

He added the government would withdraw previous proposal to raise R40 billion in additional revenue. 

This year’s budget comes at a difficult time when the country is trying to adjust its economic cracks after a severe Covid-19 lockdown. It also comes as the country prepares for the biggest vaccination programme in history.

The finance minister said the government is allocating more than R10 billion for purchase and delivery of vaccines over the next two years and this will impact public purse. 

“We increased the contingency reserve from R5 billion to R12 billion to make provision for the further purchase of vaccines and to cater for other emergencies,” he added. 

South Africa is planning to vaccinate at least 67 per cent of its population to achieve herd immunity. 

Mboweni said, "The country’s total consolidated spending is expected to be R2 trillion each year over the medium term, with the majority of spending going towards social services."

On the economic outlook front, the minister said the global economic growth is expected to rebound to 5.5 per cent in 2021 before moderating slightly to 4.2 per cent in 2022, taking cues from the expected rollout of Covid-19 vaccines and other additional policy initiatives.

South African economy is expected to rebound by 3.3 per cent this year, following a 7.2 per cent contraction in 2020.

China is expected to grow at 8.1 per cent in 2021, while India will achieve a growth rate of 11.5 per cent in 2021.

The minister has also announced an 8 per cent increase in excise duties on alcohol and tobacco products saying excessive alcohol consumption can lead to negative social and health problems. 

Read in App