There are mixed reactions to Finance Minister Enoch Godongwana’s Budget Speech yesterday. The 51st address touched on topics including South Africa’s economic standing, the struggles of Eskom and the social wage.

ICYMI: Here is what you need to know about Budget 2023

Reactions to the 2023 Budget Speech

Home owners and Businesses incentives

Lew Geffen Sotheby’s International Realty CEO, Yael Geffen, regards this year’s budget as a relief to many citizens. But he says this can be undone if Eskom does not ‘come to the government’s bailout party’:

With repo rate increases over the past year leaving South Africans bleeding, we needed some relief in the budget to prevent a catastrophe in the private sector. But that relief must be weighed against the biggest threat that still looms over the economy, which is a stable power supply.

Geffen says home owners and the property industry welcomes the increase in tax brackets by 10% to R1.1m for transfer-free property deals. He also says no rises in income tax or fuel levies is more good news:

Possibly the best news for business and home owners, though, is the massive tax rebate scheme for investment in sustainable energy infrastructure. Commercial enterprises being offered a rebate of 125% of the cost of wind, solar, hydropower and biomass projects in the first year – with no limits on how much can be claimed, nor how big the project is – will be a huge incentive to get off the grid and make businesses themselves more sustainable in the long term.

You can read Minister Godongwana’s full Budget Speech HERE.

Godongwana leave municipal workers in the dust

The South African Municipal Workers’ Union (SAMWU) says the budget has ‘yet again’ failed to address the concerns of municipalities. The union says municipalities have ‘collapsed’ and is ‘unable to deliver services to residents’.

Many of the country’s municipalities have for a long time been unable to pay workers their salaries on time and in full, while many municipalities have made it a norm to deduct from workers’ salaries payments for statutory deductions and others such as pension funds and medical aids and never paying them to the intended recipients. Our view has always been that municipalities are in the coalface of service delivery, yet they are not prioritised when developing budgets.

SAMWU says that in total, the country’s 257 municipalities will ‘collectively receive R522bn’. This translates to under 10% of total government expenditure:

…this year’s budget has only allocated an additional R8.1 billion and R6.2 billion in equitable share and conditional grants respectively…These allocations to municipalities will not in anyway address the severity of the challenges faced by municipalities, in particular rural municipalities who are expected to raise the necessary revenue to continue delivering services to South Africans.

READ MORE: De Ruyter to leave Eskom with immediate effect, following explosive interview

Renewable Energy Sources

Western Cape Premier Alan Winde cautiously welcomes the announcement of ‘tax interventions to encourage businesses and households’ to turn their attention to renewable energies. Winde says this will bolster renewable power production and dampen the energy crisis:

This is partly in line with what the Western Cape Government had called for, but we should have gone further, especially for individuals whose daily lives have been significantly disrupted by relentless rolling blackouts

However, the tax incentive does not ‘go far enough’ regards Premier Winde. He says the rebate should be higher and run over a longer period. The lack of a clear plan to long-term energy resilience remains a deep concern for the Western Cape government, adds Winde:

The energy crisis will be with us for much longer than a year and if we are to sustain our country’s just energy transition, we must demonstrate a definitive commitment to renewable energy.

• Minister Godongwana says that from March 1, businesses will be able to reduce their taxable income by 125% of the cost of an investment in renewables. The incentive will be available for two years.
• People who install rooftop solar panels from March 1 will be able to claim a rebate of 25% of the cost of the panels (max of R15 000). This is on offer for 1 year.

Western Cape Minister of Finance and Economic Opportunities Mireille Wenger says the budget allocations will place some critical frontline services – like health, education and social development – under more pressure:

While we welcome the much-needed interventions to enable renewable power generation by citizens in South Africa, I remain concerned that provincial allocations through the Provincial Equitable Share are well below inflation

READ MORE: Godongwana outlines government spending today