24 February 2022
Finance Minister Enoch Godongwana’s first budget was a feel-good one. There were no new taxes, corporate tax fell, the poor got income relief, and education, health, police services and prosecutors all got more money. At the same time, government cut its future borrowing plans, which will put public finances on a sounder footing for the future.
All of this was due to the R180 billion revenue overrun brought about by a boom in commodity prices. But while it felt good in the moment, the big question is: will it work?
Godongwana stuck to his predecessor’s pledge to cut corporate tax and provide relief to workers while resisting pressure to use an almost R200bn revenue windfall to commit himself to a permanent increase in welfare spending.
In a market-pleasing budget, Godongwana pledged to maintain fiscal discipline and said SA would record a primary surplus, meaning that revenue will be higher than spending excluding interest payments, a year earlier than planned.
Officials said 45% of the extra revenue would be used to pay down debt and reduce the deficit, with the rest used to pay for the Covid-19 grant, allocations to provinces, financial support for students and health…
