SA Remains One Of The Highest Taxed Countries Following Budget Speech
If you happened to miss the annual budget speech, here are key take-aways as well as a summary of what was said.
Published: Thursday, February 23rd 2017
For those who missed the annual Budget Speech, Finance Minister, Pravin Gordhan didn't seem to have a lot of good news, especially for the rich.
A new tax bracket for the very rich will see those earning over R1.5 million charged 45% - this is up from 41% last year.
“Our growth challenge is intertwined with our transformation imperative. We need to transform in order to grow, we need to grow in order to transform. Without transformation, growth will reinforce inequality; without growth, transformation will be distorted by patronage.”
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SA, One Of The Highest Taxed Countries In The World
South Africa remains in the top four countries with the highest tax. Economist, Mike Schussler provided data showing that South Africans are some of the most taxed individuals in the world – sitting well within the top 20 and climbing every year.
A Summary Of The Annual Budget Speech 2017
Key Points To Take Away
- VAT remains unchanged
- Annual contribution limit increases from R30 000 to R33 000 on tax free saving accounts
- Increase of 30c / litre in the general fuel levy and 9c / litre in the road accident fund levy
- Sin taxes increases between 6% and 10%
CLICK BELOW to read about what South Africans should really pay for fuel.
- The budget deficit (consolidated) crept up to 3.4% for 2016/17 from the 3.2% stated in last February’s budget. This was due to less revenue collected than expected. The deficit is expected to narrow to 3.1% for 2017/18 and 2.6% in 2019/20.
- State debt is also steadily creeping up. Debt stock as a percentage of GDP is expected to stabilise at 48.2% in 2020/21 (previously 46.2% in 2017/18, and before that 43.7% in 2017/18).
- The main budget non-interest expenditure ceiling has been lowered by R26bn over the next two years (almost the same as the R25bn planned last year).
- An additional R28 billion (R18.1 billion last year) of tax revenue will be raised in 2017/18. Measures to increase revenue by a proposed R15 billion in 2017/18 will be outlined in the 2018 Budget.
- R30 billion has been reprioritised through the budget process to ensure core social expenditure is protected.
- Real growth in non-interest spending will average 1.9% over the next three years. Apart from debt-service costs, post-school education is the fastest-growing category, followed by health and social protection.
Government spending over the next three years
- R490 billion (R457 billion last year) on social grants.
- R106 billion (R93.1 billion) on transfers to universities, while the National Student Financial Aid Scheme will spend R54.3 billion (R41.2 billion).
- R751.9 billion (R707.4 billion) on basic education, including R48.3 billion for subsidies to schools, R42.9 billion for infrastructure, and R12.7 billion (R14.9 billion) for learner and teacher support materials.
- R114 billion (R108.3 billion) for subsidised public housing.
- R94.4 billion (R102 billion) on water resources and bulk infrastructure.
- R189 billion (R171.3 billion) on transfers of the local government equitable share to provide basic services to poor households.
- R142.6 billion to support affordable public transport.
- R606 billion on health, with R59.5 billion on the HIV/Aids conditional grant.
Multiple Changes In Tax
- A new top marginal income tax bracket for individuals combined with partial relief for bracket creep will raise an additional R16.5 billion.
- R6.8 billion will be collected through a higher dividend withholding tax rate. Increases in fuel taxes and alcohol and tobacco excise duties will together increase revenue by R5.1 billion.
- As soon as the necessary legislation is approved, government will implement a tax on sugary beverages. The rate will be 2.1 cents per gram for sugar content above 4g per 100 ml.
- A revised Carbon Tax Bill will be published for public consultation and tabling in Parliament by mid-2017.
- The first R900 000 of the value of property acquired from March 1, 2017, will be taxed at zero percent. Before March 1, 2017 the first R750 000 of the value of property was taxed at zero percent.
- The general fuel levy will increase by 30c/litre on April 5, 2017. This will push the general fuel levy up to R3.15/litre of petrol and to R3.00/litre of diesel. The road accident levy will increase by 9c/litre of petrol and diesel on April 5, 2017.
- Personal income tax will bring in R482bn, VAT R312bn, company tax R218 billion, fuel levies R96.1 billion and customs and excise duties R96 billion in the coming year.
Sin Taxes Rise Again
Taxes on alcohol and tobacco are set to rise as follows:
- Beer 12c/340ml
- Fortified wine 26c/750ml
- Ciders and alcoholic fruit beverages 12c/340ml
- Unfortified wine 23c/750ml
- Sparkling wine 70c/750ml
- Spirits 443c/750ml
- Cigarettes 106c/packet of 20
- Cigarette tobacco 119c/50g
- Pipe tobacco 40c/25g
- Cigars 658c/23g
Social Grant Spending And Increases
Spending on social grants is set to rise from R164.9 billion in 2016/17 to R209.1 billion by 2019/20, growing at an annual average of 8.2% over the medium term. The number of social grant beneficiaries is expected to reach 18.1 million by the end of 2019/20.
The specific increases are:
- State old age grant from R1505 to R1600 per month
- State old age grant (over 75s) from R1525 to R1620
- War veterans grant from R1525 to R1620
- Disability grant from R1505 to R1600
- Foster care grant from R890 to R920
- Care dependency grant from R1505 to R1600
- Child support grant from R355 to R380