South African minister of finance Enoch Godongwana delivered his maiden budget speech on Wednesday, 23 February 2022 at Parliament, in Cape Town. This is one of the country’s most awaited addresses, as the budget speech impacts a number of different industries across South Africa.
South Africa’s alcohol industry has been struggling since the first alcohol ban at the start of the Covid-19 pandemic, and now minister Godongwana announced new excise taxes for this and the tobacco industry.
Prices will be implemented immediately, and the increases are as follows:
- The price of a bottle of spirits will increase by R4.83
- A 750ml bottle of wine will be 17c more expensive
- A pack of cigarettes will cost consumers R1.03 more
- 11c will be added to the price of a 340ml can of cider or beer
- Sparkling wine will cost 76c more
- Cigars weighing 23g will be R6.77 more expensive
- For every 25g of pipe or rolling tobacco, 37c will be added
- Vaping products will also be R2.90 more expensive for every ml from 1 January 2023
Prioritising infrastructure
The minister also touched on infrastructure development, and announced that a total of R17.5 billion will be made available for infrastructure projects in South Africa.
According to FoodForMzansi, sister publication of FoodForAfrika.com, a number of agricultural stakeholders raised concerns that a lack of attention being paid to infrastructure has been hindering the sector.
Mr Godongwana said the National Treasury will be working to execute the results of a review of the Public-Private Partnerships framework, and the department of finance will be collaborating with the Treasury to more quickly implement infrastructure investment.
“We aim to create a centre of excellence for PPPs and other blended finance projects. This centre of excellence will be established with direct Treasury oversight. It will be a direct interface with private financial institutions for investments in critical government infrastructure programmes,” he said.
The budget facility for infrastructure approved funding for the following water and dam projects:
- The Lepelle Water Board will receive R1.4 billion for the Olifantspoort and Ebenezer plants
- R2.1 billion will be allocated for the raising the Clan William Dam in the Western Cape
- The Umgeni Water board will receive R813 million for the Lower uMkhomazi Water Supply Scheme
Many of the country’s farmers have complained about a lack of infrastructure prioritisation, particularly farmers in the Free State province; a province known for being an agricultural hub. Here, farmers have been asking the department of transport and roads to pay attention to the badly potholed roads farmers make use of to transport their produce and livestock.
Infamously, ex roads minister Sam Mashinini went to investigate the state of the roads in person, and agreed it was untenable. Later, when he was sacked, farmers in the province rejoiced as they were dissatisfied with his lack of action, despite acknowledging the issue.
Fuel tax levies and climate change
Minister Godongwana added that the South African National Roads Agency (Sanral) will receive R9.9 billion to maintain the non-toll road network. He also touched on fuel levies, saying that the higher prices of inland fuel in 2021 had a knock-on effect on the prices of transport and food, which impacted both farmers and consumers. Therefore, he said no more increases will be made to the general fuel levy for both diesel and petrol in 2022/23.
“This will provide tax relief of R3.5 billion to South Africans. There will also be no increase in the Road Accident Fund levy. Minister Mantashe and I have agreed that a review of all aspects of the fuel price is needed. Our teams have already begun to engage on this critical work.”
Another hot topic the minister covered was climate change, saying that the carbon tax rate will increase from R134 by R10, to R144. This was implemented from 1 January 2022 already.
“As required by legislation, the carbon fuel levy will increase by 1c to 9c per litre for petrol, and 10c per litre for diesel, from 6 April 2022. The first phase of the carbon tax, with substantial allowances and electricity price neutrality, will be extended to 31 December 2025,” he said.
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