South African Taxpayers' R6.5bn relief

[newsroom]

Cape Town – Taxpayers will breath a proverbial sigh of relief this year with the decision by government not to raise tax rates for businesses or individuals, to make up for the R69 billion tax shortfall this year, said Finance Minister Pravin Gordhan who has instead proposed a “moderate” tax relief of just R6.5 billion for this year.

A quarter of this relief will go to those taxpayers with annual taxable incomes of below R150 000.

The value of tax relief to households this year is half that which was handed out by the government last year to individual taxpayers. This as Gordhan revealed that the past year had been one of the “most challenging periods” for revenue collection since 1994.

While Valued-Added Tax (VAT) was 5.1 percent down from last year, corporate incomes tax are down 20 percent over 2008/2009.

The National Treasury has recommended a carbon emissions tax on new passenger vehicles which will mean more fuel efficient cars will pay less tax.

It has been recommended that the original tax proposal announced in last year’s Budget Speech be converted into a flat rate emissions tax effective from 1 September.

The government was also looking at how to implement a comprehensive carbon tax and the National Treasury would release a discussion document during the first half of this year for public comment.

Gordhan said the annual tax free interest income will be increased from R21 000 to R22 300 for those below 65 years old and from R30 000 to R32 000 for those 65 years and older.

The monthly monetary caps for deductible medical scheme contributions have also been increased – from R625 to R670 for each of the first two beneficiaries and from R380 to R410 for each additional beneficiary.

The proposed conversion of these deductions into non-refundable tax credits will be postponed to 1 March 2012.

Gordhan also made a proposal to increase taxes on fuel by 25.5c a litre of which 7.5c a litre will contribute to the funding of a new multi-product petroleum pipeline between Durban and Gauteng and 8c a litre to the Road Accident Fund levy.

The minister also proposed a review of the current treatment of winnings in the hands of gamblers as exempt from personal income tax.

Measures will also be considered to limit opportunities for money laundering, unlicensed online gambling and other abuses.

Personal income tax is expected to make up the largest chunk of tax receipts, or 34.7 percent of the total tax revenue, followed by VAT payments at 25.3 percent, corporate income tax at 20.6 percent and excise duties at 3.7 percent of tax revenue. – BuaNews