Budget Speech 2021-GWM Chartered Accountants

Budget Speech 2021-GWM Chartered Accountants

Written by: Wilna Meyer
Date: 24 February 2021
Although gross debt increased to 80.3% of GDP ,individual taxpayers will pay less tax this year, but smokers and drinkers are hit hard

Finance Minister Tito Mboweni tabled the 2021 budget in Parliament on Wednesday. The news was never going to be good, but a few positive announcements raised eyebrows. 

The budget deficit, although the highest on record, was slightly lower than expected. Payers of personal income tax received (unexpected) relief, and the corporate tax rate will drop to 27% from next year. This will help consumers and businesses in difficult times and hopefully stimulate the economy.


On the downside, South Africa’s fiscal position has deteriorated significantly. The only way out of this mess is to get the economy growing, and it will take hard and unpopular decisions to change the growth trajectory. Unfortunately, Mboweni did not announce any significant government policy changes and merely echoed previous promises of imminent restructuring. The main disappointment, for me at least, was a lack of action.

  • Although not proposed to take effect in the current year, there is a proposal to decrease the corporate income tax rate to 27% from 1 April 2022;
  • Above-inflation increase of 5% in personal income tax brackets and rebates;
  • An inflation-linked general fuel levy increase of 15c/l for petrol and above-inflation increase of 11c/l in the RAF levy;
  • The carbon tax levy for 2021 will increase by 1c to 8c/litre for petrol and 9c/litre for diesel from 7 April 2021;
  • 8% increase in alcohol and tobacco excise duties;
  • The UIF contribution ceiling will increase for the first time in 4 years, to be in line with the benefit ceiling and set at R17 711.58 per month from 1 March 2021;
  • Reduced levy of 12.5c/bag will be introduced for more environmentally friendly (bio-based) shopping bags, whilst the current 25c/bag will be retained for normal plastic bags;
  • The urban development zones and learnership tax incentives will be extended for two years while their reviews are completed;
  • The venture capital company (VCC) incentive, which was initiated in 2009 to encourage retail investments in smaller businesses, will not be extended beyond 30 June 2021.
SAICA Budget 2021 Summary and Commentary
Budget Tax Guide 2021