Motorists will be hit hard following Finance Minister, Tito Mboweni’s, 2019 Budget Speech. The costs they’ll have to budget even harder for, are the fuel price levy, the Road Accident Fund levy and a Carbon Tax.
Consumers in general can expect an increase in the cost of daily living, not only at the fuel pumps but when buying consumables like tobacco, alcohol and sugary drinks.
What you should prepare for:
Filling up and on the road:
- The fuel levy for petrol has gone up by 29 cents and diesel by 30 cents.
- The Road Accident Fund levy went up by 5 cents per litre of fuel, although the Minister said the levy won’t cover the R215 billion debt deficit. This will be effective from April.
- In June – expect a carbon fuel levy of 9 cents a litre on petrol and 10 cents on diesel.
- In March - In addition to the above, there is an expected petrol price increase next month (petrol is expected to rise by another 43 cents per litre, diesel by another 62 cents per litre) – ouch!
Taking all of the above points into consideration, by the middle of the year, motorists will be paying around R14,94 per litre of petrol and R14,22 per litre of diesel. So a car with a 50 litre fuel tank will cost around R747 (petrol) and R711 (diesel) to fill up.
Prices of tobacco and alcohol:
Smokers take note:
A pack of 20 cigarettes will cost R1.14 more and excise duty on a typical cigar will go up by about 64 cents.
Wine lovers alert:
You will pay 22 cents more for a 750ml litre bottle, and sparkling wine will cost an extra 84 cents. 340ml cans of beer will increase by 12 cents. There will be no tax on sorghum beer.
Whisky drinkers, brace yourselves:
A R4.54 per bottle price increase is coming your way.
If you can’t fit these increases into your monthly budget, it’s a good idea to consider cutting down or cutting these items out rather than risking your health with inferior quality items as this could end up costing you far more in medical bills in the future.
Sugar lovers beware:
Introduced last year, the sugar tax will increase from 2.1 cents per gram above 4 grams, to 2.21 cents per gram.
Wondering where you tax money goes?
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.
There is good news!
Good news inEducation:
More than R30 billion has been allocated to build new schools and maintain schooling infrastructure.
Good news in Healthcare:
To increase the number 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.
Good news for Entrepreneurs
R481.6m has been allocated to the Small Enterprise Development Agency to expand the small business incubation programme.
Good news in Housing:
A R950m subsidy has been allocated over three years to assist first-time home buyers when purchasing a home.
Good news in alleviating poverty:
R567bn has been allocated to social grant payments to assist the elderly and provide for child support.
So taking all of this into account Budget Insurance suggests five things to consider when reviewing your monthly budget – ‘cos you can’t afford not to!
- Create and stick to a monthly budget – start with a list of fixed expenses and other monthly deductions. Carefully look at your spending and check where you can cut down on luxuries like take-aways, entertainment and satellite TV and essentials like your cellphone, groceries and transport.
- Cut costs creatively – you could start lift-clubs to save money on petrol and encourage your family to switch off lights in unused rooms to save on electricity.
- Downsize if need be – if car repayments, maintenance and fuel are eating up a third of your monthly income, downsizing may be necessary. Other big ticket items like rent and consolidating your high-interest debt could also be tackled.
- Don’t cut your insurance – it could cost you big time – being underinsured or uninsured can drastically increase your expenses despite your best budgeting intentions, especially for items which we tend not to insure but are in fact high risk such like cell phones, laptops and home contents. Overinsuring can also cost so check your policies and ensure you’re correctly covered.
- Keep credit cards out of sight – keep these for emergencies only. Rather carry a debit card for everyday purchases and save up for the more expensive things you want.
And there you have it – the lowdown on the Budget Speech and what you need to know to stay in budget in 2019!
This article is provided for informational purposes only and should not be construed as legal or financial advice.