Therèse Havenga, head of transformation at Momentum Investo, anticipates what consumers can expect from the finance minister in his Budget Speech 2023. The president of South Africa normally delivers the State of the Nation Address (SONA) at the beginning of February. The SONA sets out the government's accomplishments in the past year, as well as the government's plans for the next year and beyond.

These plans need to be financed. This is where the National Budget comes in. And it is addressed to the nation by the Minister of Finance on the first Wednesday after 20 February. In this case, Wednesday, 22 February 2023.

But how exactly is this going to impact your household finances? Here's a handy list of things to look out for and understand about this year's Budget address:

Taxes likely to change and affect household finances
The government's most significant sources of tax income include:

• Personal income tax on individuals
• Value-added tax (VAT), which is paid on almost all goods and services
• Income tax paid by companies on the profits they make
• Fuel levies
• Customs duties on internationally traded goods
• Excise duties on products such as tobacco, non-alcoholic and alcoholic beverages

Personal income taxes are progressive, so the rate at which income is taxed increases as you earn more. Given the economy's weak state, increases in personal income tax rates are unlikely this year.

What is likely, though, is that individuals may not receive full relief for so-called "bracket creep". A good way to explain "bracket creep" is to describe how it must be avoided to ensure the tax burden on individuals remains the same.

For no "bracket creep" to occur, the consumer price inflation rate (CPI) must increase the personal income tax brackets. Should the tax brackets not (or partly) be increased by CPI, salaries that increase to a higher tax bracket will pay more tax, reducing income and making people poorer.

The company income tax rate is set to be reduced from 28% to 27% after 31 March 2023. This is good news for individuals. Company taxes are eventually passed onto the consumers at higher prices. A lower company tax rate means less pressure on companies to increase their prices.

Increases will almost certainly be announced on excise duties on tobacco products and beverages, non-alcoholic and alcoholic. If these increases exceed CPI, it will pressure CPI to remain high for longer, meaning interest rates will stay higher.

Following no increase in the fuel levy last year, the minister may again resort to increasing the fuel levy. Any increase in the fuel levy will increase pressure on CPI to increase, which may keep interest rates on debt higher for longer. The best outcome would be raising the fuel levy by less than the CPI, not by more than 4,5%. The minister of finance can tinker with a range of smaller taxes such as the sugar, plastic bag, " electricity, " and carbon emissions tax, but these should not affect consumers much.

Measures expected to affect households The so-called social wage may very likely be increased to help the poor. This includes free water, electricity, schooling, university, health services, social relief grants (currently R350 per month), and other social grants. This already makes up more than 60% of government expenditure, excluding interest on debt. There is little room to increase this by much, but some increases will occur, comforting many households.

In addition, a provision will be made to increase public servants' salaries, which comprise around 20% of the workforce – a fair number of households in South Africa. The minister may also announce some incentives for households and small businesses to buy solar panels and/or inverters to reduce the load on the electricity grid and ultimately lower increases in electricity costs.

Other ways the National Budget affects CPI and interest rates The government's revenue is not enough to finance its expenditure. So, it has to borrow money from local and international investors to finance the shortfall. However, if the shortfall (the fiscal deficit) is too high for investors, it will affect consumers in two ways. Firstly, the rand will weaken, so the price of imported products will increase, contributing to higher CPI and interest rates for longer.

Secondly, investors will lend money to the government at a higher interest rate due to perceived risk. This means the government will have less money to finance its plans as a larger portion of its expenses will have to be used to pay the interest on its debt. Fortunately, the expectation is not for this to happen, as the government has been on track to reduce this risk.

Yet, we must prepare ourselves for the reality that the government will take over some of Eskom's R400 billion debt. This will increase the government's interest in its debt, but not by much. However, with Eskom's debt burden reduced, the utility may end up charging consumers lower increases on electricity tariffs in future.

The finance minister has a whole department helping him draw up his budget and make financial decisions for South Africa. Households must not shy away from getting help with their finances either. They can do worse than call in the help of a financial adviser to help them navigate the financial landscape. A financial adviser worth their salt will help anyone regardless of their income level and can help empower people on their journey to success.