By now, I’m sure everyone knows the bad-ish news:

  • Higher fuel levies
  • Higher electricity levies
  • Higher sin taxes
  • Higher transfer duties for the rich
  • Higher tax rates for the big earners (by 1%)

And the other stuff:

  • Inflation-adjusted rebates, tax credits, etc (leaving the less-big earners either tax neutral or better off)
  • A one-year UIF break
  • Much higher tax savings for small businesses (although it’s quite a chore to register as a small business – so this feels more token than anything else)
  • Higher social welfare grants
  • More government spending (although it’s only planned to be 2.1% higher a year until 2018 – well below inflation – so in real terms, the government is planning to spend less).
  • No change in VAT
  • Fun new Tax Free Savings Accounts (see here).

Some thoughts:

  1. It’s not necessarily a fair budget – but it is a progressive one.
  2. The middle class are going to be paying less tax in general (except on their fuel, electricity, alcohol and cigarettes); and the poor are going to be receiving more money overall (much lower UIF contributions; higher tax rebates; and all the social grants).
  3. The adjustment in the fuel levy seems (to me) to be a much cleaner alternative to raising the VAT. The VAT system is more reliant on general compliance than we perhaps realise – because how easy is it for a vendor to start accepting cash and forgoing an invoice? The answer is: very easy. It’s risky and it will drive an accountant crazy – but the higher the VAT rate, the stronger the incentive to do something to reduce it.
  4. The other thing is: a higher fuel levy probably has a smaller impact on the low income classes than an increase in VAT would have. While the middle and upper class cruise around in one person per vehicle, the poor travel by commuter taxi. And the taxis cram, what, 20 people into a vehicle? That’s quite a cost-share.
  5. And then you have the larger social grants. Putting more money into the hands of the lower and middle classes is not such a bad thing for the rich. After all, it’s stimulative. And the data shows that the social grant money tends to be well used rather than being “blown on beer and whores” as the trolls would have it.

I guess what I’m saying is: we all knew this was going to be a difficult budget. It’s balancing a lot of awkwardness: high deficits, high unemployment, high inequality, growing debt, falling credit ratings, low growth, bad infrastructure, appalling morale, EFF vitriol, evaporated investor confidence…

And given all of that, I thought that the budget was impressively balanced. Ironically.

I also really liked this article from Matthew Lester, which I think is worth some of your time.

And you can find the full budget speech here.

Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at