Taxpayers should expect to pay a percentage point more from their personal income tax for government to raise an extra R12 billion this year and another R15 billion next year, the National Treasury said on Wednesday.
Government has also proposed an overall increase in fuel levies of 80.5 cents per litre, of which 30.5 cents per litre is an increase in the general fuel levy and 50 cents per litre is for the Road Accident Fund (RAF).
The proposals, however, will see those in the lower income bracket – those that earn less than R181 900 per annum, being spared from tax increases.
“The 2015 Budget proposals build on the progressive character of the tax system by raising all marginal rates by one percentage point, except for the lowest bracket, which remains unchanged.
“Leaving aside other adjustments, the rate changes will result in individuals with an annual taxable income of R200 000 a year paying about R21 more in monthly taxes.
“Those earning R500 000 will pay an extra R271 per month; and those earning R1.5 million will pay an extra R1 105 each month,” the National Treasury said.
The increases, which were widely expected, follows Finance Minister Nhlanhla Nene’s announcement when he tabled the Medium Term Budget Policy Statement, dubbed the mini budget, in October last year, that to bolster government low revenue collection, difficult tax decisions would be taken to raise the shortfall.
Delivering the National Budget in the National Assembly, the Minister said the budget tax proposals were aimed at increasing tax revenues for the corporate tax base, increasing incentives for small businesses and promoting a greener economy.
“However, tax brackets, rebates and medical scheme contribution credits will be adjusted for inflation, as in previous years. The net effect is that there will be tax relief below about R450 000 a year, while those with higher incomes will pay more in tax.
“In essence, government aims to narrow the budget deficit, stabilise debt and begin to rebuild the fiscal space,” he said.
A combination of a lower expenditure ceiling and higher taxes will narrow the budget deficit to 2.5% of the Gross Domestic Product (GDP) by 2017/ 18, the National Treasury said.
“The 2015 Budget tax proposals are expected to add R16.8 billion to revenue in the next year, before accounting for fiscal drag, and carry forward over subsequent years.”
Increase in fuel levy proposed
Government has also proposed an increase in fuel levies spend.
This will result in overall increase in the fuel levies going up by 80.5 cents per litre, of which 30.5 cents per litre is an increase in the general fuel levy and 50 cents per litre is for the Road Accident Fund (RAF), as described below.
According to the National Treasury, South Africa’s fuel levies are comparatively low by international standards, and the recent decline in fuel prices creates space for an increase.
“An increase in the general fuel levy of 30.5 cents a litre will take effect in April,” the Minister said.
The National Treasury also said that the additional revenue will help to close the gap in the public finances over the medium term.
Beyond that, several long-term policy objectives, including national health insurance and expanding the post-school education system, imply permanent spending increases that cannot be financed from existing levels of revenue.
The department also said that South Africans need to consider and debate the adjustments required to create room for these progressive spending policies.
“The impact of any proposed measures on employment and the cost of labour, as well as the long-term growth of the economy, needs to be taken into account,” the National Treasury said. – SAnews.gov.za
Latest posts by Alan Straton (see all)
- Nelson Mandela Bay Municipality and Cycling South Africa present the Africa Cup - 16 July 2019
- New Mantis website launched - 16 July 2019
- Responsible Business - 16 July 2019
- Library and Literacy Centre opens in Zwide - 16 July 2019
- Paul Gardiner says; “It is Time” - 16 July 2019