What The 2019 Budget Means To Your Back Pocket

Mini budget e1540466900108 - What The 2019 Budget Means To Your Back Pocket

Finance Minister, Tito Mboweni, just delivered his 2019 budget speech against the backdrop of a tough economy and an even tougher energy crisis. The biggest cost will again be felt by motorists who will be hit by a triple whammy: the fuel price levy, the Road Accident Fund levy and a Carbon Tax.

According to Susan Steward from Budget Insurance, “On the whole, daily living will become more expensive this year, and consumers are going to feel the pinch when filling up their cars, buying tobacco and alcohol and indulging in sugary drinks.”

Here’s why:

  • Petrol and diesel: The fuel levy for petrol and diesel went up by 29 cents and 30 cents respectively.
  • The Road Accident Fund levy went up by 5 cents per litre of fuel, despite the Minister saying the levy won’t cover the R215 billion liability. This comes into effect in April.
  • A carbon fuel levy of 9 cents a litre on petrol and 10 cents on diesel will come into effect in June.
  • In addition, there is expected to be a petrol price increase in March (petrol is expected to rise by another 43 cents per litre, diesel by another 62 cents per litre).
  • That means, by the middle of the year, motorists will be paying around R14,94 per litre of petrol and R14,22 per litre of diesel. A car with a 50 litre fuel tank will cost around R747 (petrol) and R711 (diesel).
  • Tobacco and alcohol: Smokers will be forking out more to support their habit. A pack of 20 cigarettes will increase by R1.14 and excise duty on a typical cigar will go up by about 64 cents.
  • Wine lovers will pay 22 cents more for a 750ml litre bottle and sparkling wine will cost an extra 84 cents while 340ml cans of beer will increase by 12 cents. There will be no tax on sorghum beer. The biggest increase was whiskey – up by R4.54 for a bottle.
  • By increasing sin taxes, consumers might opt for cheaper substitutes including illicit cigarettes or alcohol. If your monthly household budget cannot cover the increase of these items, it is best to either cut down or quit, rather than compromise your health with inferior products. This might end up costing you more in medical bills over the long term.
  • Sugar tax: Introduced last year, the sugar tax will increase from 2.1 cents per gram above 4 grams, to 2.21 cents per gram.

Where will my tax money go?

In the 2019 budget, 47.9% of nationally-raised funds are allocated to national government, 43% to provinces and 9.1% to local government over the medium term, after providing for debt-service costs and the contingency reserve.

Was there good news?

  • Education: Over R30 billion is allocated to build new schools and maintain schooling infrastructure.
  • Health: To increase the staff complement of doctors and nurses in the public health sector, R2.8 billion has been allocated to a new human resources grant and R1bn for medical interns.
  • Entrepreneurship: R481.6m was allocated to the Small Enterprise Development Agency to expand the small business incubation programme.
  • Housing: A R950m subsidy has been allocated over three years to assist first-time home buyers when purchasing a home.
  • Fighting poverty: Government has allocated R567bn for social grant payments to assist the elderly and with child support.

With these increases in mind, Budget Insurance recommends five things to consider when reviewing your monthly budget:

  1. To draw up a budget, start with a list of fixed expenditures and other monthly deductions. Have a careful look at what you are spending your money on and identify where you might be “leaking” cash on non-essentials like take-aways, entertainment and satellite TV, as well as on essentials such as your cellphone, groceries and transport. Once you have pinpointed areas where you could be spending less, start cutting back.
  2. Get creative when looking for ways to cut back on costs. For instance, you could establish lift-clubs to save money on petrol and encourage your family to switch off lights in unoccupied rooms to save on electricity costs.
  3. If repayments on your vehicle, maintenance and fuel are eating up a third of your income every month, then it is time to reconsider whether or not to downsize. Other big ticket items such as your monthly rental payments and consolidating your high-interest debt should also be tackled as part of your budget review.
  4. Being underinsured is one thing which can drastically increase your expenses despite your best budgeting intentions. This is especially true for items which we tend not to insure but are in fact high risk such as cellphones, laptops and home contents. At the same time, being over insured is also costly so go through your various policies and be clear on the type of cover you pay for each month.
  5. Put away your credit cards. Don’t carry them around in your purse or wallet as you might be tempted to spend. Rather carry a debit card for everyday purchases and save-up for the more expensive things you want.

The post What The 2019 Budget Means To Your Back Pocket appeared first on iAfrica.com.

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