Count down to the 2024 Budget Speech : Budget Predictions

The National Budget will be tabled in Parliament on 21 February 2024, we look at possible
predictions, amendments or reforms to be introduced. It must be acknowledged that the
Finance Minister has a tough task in having to present a budget against the backdrop of South
Africa’s weak fiscal position and under the scrutiny of rating agencies. With the South African
Economy deteriorating it only creates a climate which impacts negatively on revenue collections.

Economic Growth

The volatile landscape whether it be locally or internationally has certainly played a part in
the Economic Growth or lack thereof in South Africa over the recent year. Economists still
predict a growth even if its slight. Our hope is that Budget 2024 will be encouraging to the
business community and provide encouragement to business sentiment by providing an
update on progress made in key economic and structural reforms, as well as solutions
towards the country’s energy and logistics challenges.

In addition to the hurdles mentioned above of energy and logistics the ever increasing
National debt burden also plays a pivotal role in stifiling any positive growth. It is expected
that the Minister will announce and implement tougher measures on SOE’s that are
defaulting and this would also include municipal debt.

Tax revenue estimates

Tax revenue projections were revised down over the medium-term, reflecting weak in-year
collections, and lower tax base outlook. National Treasury made a significant downward
revision to this figure in MTBPS 2023 by R56 billion to R1,731 billion, mainly led by
substantial decreases in the expected corporate tax collections of R36 billion and VAT of R26
billion due to higher refunds.

SARS have stated that they have a strategy which would encompass hiring staff with a
specific calibre and also embracing digitisation to cover and tighten all streams against tax
base erosion and tax revenue losses. The R1 billion allocated to SARS, in the MTBPS over the
next few years, will assist the revenue authority in implementing these plans.

Co-operation between SARS and the Financial Intelligence Centre at the South African
Reserve Bank to assist in fighting illegitimate cross-border flows and tax evasion have been
ongoing and improving which will only continue in improving tax collections. It will be
interesting to see what tax reforms the minister implements to achieve this objective.

In MTBPS 2023, National Treasury estimated tax revenues for 2024/25 with an unspecified
proposed increase in taxes amounting to R15 billion, the details of which are to be
announced in Budget 2024. The finance minister has acknowledged that increasing taxes in
the current economic environment would be difficult however it is looking likely to be the
only option available.

Our predictions in this regard are set our below:

Personal Income Tax

It is highly unlikely that there will be a further increase to the rate of 45% however, expect
that once again, the fiscal drag across all brackets and rebates will be below inflation, if
none at all.

Should National Treasury proceed with the proposed R15 billion in additional revenue
measures announced in MTBPS 2023, it would require a 0.5% increase in tax rates
across all tax bands (or an equivalent amount in fiscal drag) to raise this amount from
Personal Income Tax. To put this into perspective if this tax burden was enforced on middle
income earners you would be looking on average of 1% increase to individuals earning
R500,000.00 per annum. Government is well aware that adding such a burden on a fragile
tax base would create more problems than solutions thus if not an increase to Personal
Income tax then the other option is an increase in VAT.

*Medical Tax Credits

The NHI fund is almost at ratification stage but the budget comes a bit early for any concrete
application. The current Medical Tax credits would still be implemented with a below inflation
increase on the medical tax credit amount.

*Capital Gains Tax (CGT)

Not forgetting the comments of the Davis committee in terms of “wealth taxes” and the
need to increase revenue it is perceived that Capital Gains Tax forms part of what is deemed
to be a “tax on the wealthy” thus a possible increase on the inclusion rate from 40% by 5%
or even 10% taking it up to 50%, is a possibility.

Remote Working

National Treasury announced a review of the tax provisions for travel and working from home as
part incorporating the “new norm” in terms of employment. It is highly unlikely though that
significant changes would be mentioned let alone applied and this may only be triggered in Budget

2025. This would also be dependent if the trend of working from home will still continue.

Donations tax & Estate Duty Taxes

No further changes are expected in relation to these taxes at this stage.


Post the Davis Tax Committee’s recommendations on the taxation of Trusts, there has been
limited if no, communication or further discussions in this regard. As such we do not expect
any drastic changes in the taxation of Trusts to be mentioned at the budget speech.
However it must be noted that if this was looked into closer by the Committee, there is a
possibility of the fiscal receiving significant revenue dependent on the manner of taxation
on Trusts.


No change is expected in the corporate tax rate of 27%. The global trend for corporate tax
rates is downward therefore any increase would negatively impact on the competitiveness
of SA’s tax rates which will have an adverse effect in promoting economic growth and

*Capital Gains Tax (CGT) for companies

It is unlikely that this rate can be increased any further, as this would effectively result in the
taxation of gains arising from inflation. However, it is possible that we could see the
announcement of reforms to limit certain Exemptions and Roll over Relief options and this
would result in a substantial increase in revenues derived from corporate income tax.

*Dividends Tax

We do not expect further changes to this rate.

Indirect taxes – VAT

Although increases in tax, in particular direct taxes, are generally regarded as anti-growth,
one could argue that, at this juncture, they will contribute indirectly to higher economic
growth by helping to maintain South Africa’s credit ratings and in that way prevent an
increase in the cost of capital. The choice of taxes through which to raise the required
additional revenue will nevertheless have to be exercised carefully to minimise any anti-
growth bias. The current mix suggests that there may be greater room to increase indirect

Although the increase in the VAT rate in the 2018 budget resulted in a significant public
outcry on the basis of the perceived regressivity of VAT, the significant pressure on the
fiscus to raise revenue is likely to prompt a further increase in the VAT rate.

In making the decision the ministry could in fact increase the rate, yet also increase the
quota of goods deemed VAT exempt or zero rated , for example on basic foods. This would
then create a balancing act as the increased VAT rate would be more applicable to luxury
goods whilst basic commodities would not be affected providing reprieve for low and
medium income earners.

Such amendments on a luxury VAT rate though would be an administrative nightmare while
raising relatively small amounts of additional tax revenues. There were talks of the zero
rating on fuel be removed. This would definitely increase revenue however no consultations
have taken place as yet and it is therefore expected that fuel will continue to be zero-rated
for the time being.

Thus we expect an increase in the VAT rate of 0.5% with an increase to the items deemed
VAT exempt or zero rated.

Fuel levies and Road Accident Fund

The general fuel levy is one of the largest revenue item in the budget and has become an
increasingly important source of revenue in the last decade. An inflationary increase in the
fuel levy is expected. This incrrease would raise additional tax revenues. In addition we
expect an inflationary increase in the RAF levy.

Transfer duties

No change is envisaged.

Sin Taxes

An increase of excise duties on tobacco and alcohol is a certainty. Smokers and drinkers can
expect to see above inflation increases. A third element will be added to this cocktail with
an inflationary increase to Vaping products. The “three’s company” approach will not only
generate additional revenue but could work in tandom with South Africa’s steady approach
towards encouraging healthy living trends.

Sugar Tax

The Health Promotion Levy (HPL), also known as the sugar tax, is an excise tax that is levied
on sugar-sweetened beverages. We expect an inflationary increase in this regard.

Crypto Currency

In addition to the predictions above, we envisage a mention of the “Digital Economy” during
the speech. In November 2023, SARS joined 47 other countries in agreeing to adopt the
Crypto-Asset Reporting Framework (CARF). CARF provides for the automatic exchange of
tax relevant information on crypto-assets between countries who will collect information
from Crypto-Asset Service Providers. It can therefore be expected that SARS will commence
with steps to implement CARF and the amended CRS during the course of the year.

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