Middle to high income taxpayers will be hit with a one percentage point hike and a sharp rise in the fuel levy.
This was announced by Finance Minister Nhlanhla Nene in his budget speech yesterday.
Sweeping cuts in government expenditure are also part of Nene’s recipe for fiscal consolidation and debt reduction.
Tax increases are to generate R16.8-billion‚ with about half of this being returned to low-income earners. In terms of the tax proposals‚ all taxpayers earning more than R181900 a year will pay one percentage point more in tax‚ providing R9.4-billion more to the fiscus.
However‚ R8.5-billion of this will be given back to those earning less than R450000 a year in the form of an inflation adjustment in the tax bracket as well as rebates and medical scheme contribution credits.
Indirect taxes will raise R8.3-billion, with R6.5-billion coming from a 30.5c a litre increase in the general fuel levy – currently 224.5c for 93 octane petrol and 209.5c for diesel – which will take effect in April; R1.2-billion from increased taxes on alcohol and R602-million from excise duties on tobacco products.
Small businesses with a turnover of less than R1-million a year will benefit from a more generous tax regime. Those with a turnover of less than R335000 a year will pay no tax and the maximum rate will be reduced from 6% to 3%.
The road accident levy will rise by 50c from R1.04 to help the Road Accident Fund address its accumulated unfunded liability of R98.5-billion for road accident claims.
On the other hand‚ a contribution threshold of R1000 for the Unemployment Insurance Fund will apply in 2015-16, providing a R15-billion benefit to employers and workers.
New rates have been proposed for transfer duty to provide relief to middle-income households. The new rates eliminate all transfer duty on property acquired below R750000‚ decrease the effective transfer-duty liability for properties acquired up to about R2.3-million and increase liability for more expensive properties to 11% of the property value.
The electricity levy will rise from 3.5c/kwh to 5.5c/kwh temporarily pending a carbon tax next year.
The energy efficiency savings tax incentive will increase from 45c/kwh to 95c/kwh and will be extended to co-generation projects.
Nene does not rule out increasing the VAT rate but will consult further and consider the findings of the Davis tax committee.
True to his promise in the medium-term budget policy statement‚ R25-billion has been slashed from state expenditure over the next two years‚ or 1% of projected budgets.
Interest on state debt is the fastest rising expenditure item‚ increasing from R115-billion in 2014-15 to R153-billion in 2017-18 and amounting to R421-billion over the three years.
Government departments will be required to control personnel budgets and eliminate waste. A freeze on personnel numbers will apply.
No announcement was made on which state-owned assets would be sold to finance Eskom’s capital injection of R23-billion‚ but Nene said this would be paid in instalments‚ the first of R10-billion being in June and the other of R13-billion later in the year. — BDlive
Tax hike for middle earners
This was announced by Finance Minister Nhlanhla Nene in his budget speech yesterday.
Sweeping cuts in government expenditure are also part of Nene’s recipe for fiscal consolidation and debt reduction.
Tax increases are to generate R16.8-billion‚ with about half of this being returned to low-income earners. In terms of the tax proposals‚ all taxpayers earning more than R181900 a year will pay one percentage point more in tax‚ providing R9.4-billion more to the fiscus.
However‚ R8.5-billion of this will be given back to those earning less than R450000 a year in the form of an inflation adjustment in the tax bracket as well as rebates and medical scheme contribution credits.
Indirect taxes will raise R8.3-billion, with R6.5-billion coming from a 30.5c a litre increase in the general fuel levy – currently 224.5c for 93 octane petrol and 209.5c for diesel – which will take effect in April; R1.2-billion from increased taxes on alcohol and R602-million from excise duties on tobacco products.
Small businesses with a turnover of less than R1-million a year will benefit from a more generous tax regime. Those with a turnover of less than R335000 a year will pay no tax and the maximum rate will be reduced from 6% to 3%.
The road accident levy will rise by 50c from R1.04 to help the Road Accident Fund address its accumulated unfunded liability of R98.5-billion for road accident claims.
On the other hand‚ a contribution threshold of R1000 for the Unemployment Insurance Fund will apply in 2015-16, providing a R15-billion benefit to employers and workers.
New rates have been proposed for transfer duty to provide relief to middle-income households. The new rates eliminate all transfer duty on property acquired below R750000‚ decrease the effective transfer-duty liability for properties acquired up to about R2.3-million and increase liability for more expensive properties to 11% of the property value.
The electricity levy will rise from 3.5c/kwh to 5.5c/kwh temporarily pending a carbon tax next year.
The energy efficiency savings tax incentive will increase from 45c/kwh to 95c/kwh and will be extended to co-generation projects.
Nene does not rule out increasing the VAT rate but will consult further and consider the findings of the Davis tax committee.
True to his promise in the medium-term budget policy statement‚ R25-billion has been slashed from state expenditure over the next two years‚ or 1% of projected budgets.
Interest on state debt is the fastest rising expenditure item‚ increasing from R115-billion in 2014-15 to R153-billion in 2017-18 and amounting to R421-billion over the three years.
Government departments will be required to control personnel budgets and eliminate waste. A freeze on personnel numbers will apply.
No announcement was made on which state-owned assets would be sold to finance Eskom’s capital injection of R23-billion‚ but Nene said this would be paid in instalments‚ the first of R10-billion being in June and the other of R13-billion later in the year. — BDlive
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