Pretoria - Finance Minister Enoch Godongwana yesterday announced tax incentives for those who install solar rooftop panels while making provision for debt relief to Eskom, leaving boozers and smokers to bear the brunt.
With households continuously being under pressure from the rising cost of living and high unemployment, Godongwana also announced that there would be less of a burden on the taxpayer.
Godongwana was tabling the annual Budget speech in the National Assembly in Cape Town yesterday.
He said: “Individuals who install rooftop solar panels from March 1, 2023 will be able to claim a rebate of 25% of the cost of the panels, up to a maximum of R15 000. This can be used to reduce their tax liability in the 2023/24 tax year.
“Changes to the Bounce Back Loan Guarantee Scheme are also proposed to incentivise renewable energy, rooftop solar, and address energy-related constraints experienced by small and medium enterprises.”
Godongwana added that he would guarantee solar-related loans for small and medium enterprises on a 20% first-loss basis, while also committing to provide debt relief to Eskom of R254 billion.
“Mainly due to this Eskom debt relief, government debt will stabilise at a higher level of 73.6% of GDP in 2025/26,” the minister said.
He said this would ease pressure on the power utility’s balance sheet enabling it to invest in transmission and distribution infrastructure, while also allowing the embattled entity to conduct the maintenance required to improve the availability of electricity. R337bn of the electricity entity debt was already government guaranteed.
“We are proposing a total debt-relief arrangement for Eskom of R254bn. This consists of two components. One is R184bn, which represents Eskom’s full debt settlement requirement in three tranches over the medium term. Second is a direct take-over of up to R70bn of Eskom’s loan portfolio in 2025/26.”
Godongwana had announced during the Mid-Term Budget in October, that the Eskom debt relief bill would be tabled in the main Budget.
President Cyril Ramaphosa announced in his recent State of the Nation Address that solar incentives or tax support were a priority to reduce the impact of load shedding on households and the economy.
As expected, boozers and smokers would have to pay more, according to yesterday’s announcement on increases of sin taxes. Alcohol and cigarettes will increase in line with the expected inflation at 4.9%.
A can of beer will increase by 10 cents, a bottle of wine by 18 cents, whiskey by R3.90, cigarettes by 98 cents, while cigars are to go up by R5.49.
Godongwana announced that South Africa’s economy grew by an estimated 2.5% last year, an upwards revision from the 1.9% projection in 2022, reflecting a better-than-expected outcome in the third quarter of 2022.
However, the minister conceded that the government’s debt was high.
“In general, government debt is high … The gross debt stock is projected to increase from R4.73 trillion in 2022/23 to R5.84trln in 2025/26. And because the debt is high, our debt-service costs are also high. Debt-service costs are projected to average R366.8bn annually over the medium term, reaching R397.1bn in 2025/26,” he said.
There will be more spending for social grants, with the government increasing the budget by R66bn.
According to the 2023 Budget document, expenditure on social grants would increase from R233bn in 2022/23 to R248.4bn in 2025/26 due to increases in the number of recipients and the value of the grants.
“Excluding the Covid-19 social relief of distress grant, social grant coverage is expected to increase from about 18.6 million beneficiaries in March, 2023 to 19.6 million beneficiaries by March, 2026.”
The old age and disability grants increase by R90 from April 1, and a further R10 on October 1. The result is a total increase to R2 090, Godongwana said.
The public sector is projected to spend R903bn on infrastructure over the medium-term; R448bn is to be spent by state-owned companies, public entities and through public-private partnerships.
He said transport and logistics would spend an estimated R351.1bn, including for Sanral to improve the road infrastructure network. Water and sanitation would spend R132.5bn over the next three years, mainly for water boards.
He also increased the local government allocations by a total of R14.3bn – made up of R8.1bn in the local government equitable share and R6.2bn in direct conditional grants, taking the total direct allocation to R522bn.
Pretoria News