BUDGET 2017: How much you’ll have to pay the taxman
Finance Minister Pravin Gordhan has announced hard-hitting increases in personal income tax of R16.5bn for 2017-18‚ as economic growth stutters and revenue collection falls short of expectations.
These increases are part of a total R28bn package of tax hikes.
Tax revenue has deteriorated by a further R7bn since the medium-term budget policy statement in October and is now forecast to be R30.4bn lower than the 2016-17 budget estimate‚ indicating a deterioration in economic growth and tax buoyancy.
This is the largest underperformance since the 2009 recession and Gordhan told journalists at a media briefing ahead of his budget speech in the National Assembly on Wednesday that he was concerned about the state of revenue collection in the country and had been engaging with senior management of the South African Revenue Service (SARS) about this.
In his speech the minister warned SA was “at a crossroads” and “tough choices” had had to be made.
Treasury officials warn there are “significant risks” to revenue collection and economic growth in the period ahead and that these remain high.
The tax increases announced by the minister include a new top personal income tax rate of 45% for the estimated 100‚000 individuals with taxable incomes above R1.5m‚ which will raise R4.4bn. The previous top bracket of 41% was set at R701‚301.
Limited relief is provided for fiscal drag: the withholding tax on dividends will increase from 15% to 20% and the general fuel levy‚ the Road Accident Fund levy and excise duties for alcohol and tobacco will also rise.
Total tax increases of R28bn are required to fill the gaping hole in government finances and are necessary for government to maintain what Treasury described as a “measured‚ prudent course of fiscal consolidation”. This aims to narrow the budget deficit and stabilise debt.
A further R15bn in tax increases will be announced in next year’s budget.
“The budget reflects a balance between maintaining our spending commitments and ensuring long-term health of the public finances‚” Gordhan said.
He said during the media briefing that the global context was “extremely uncertain” but there were promising “green shoots” of hope in the local economy.
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INCOME TAX FOR INDIVIDUALS AND TRUSTS‚ 1 MARCH 2017 TO 28 FEBRUARY 2018
2018 tax year (1 March 2017 — 28 February 2018)
Taxable income (R)
Rates of tax (R)
R0 – R189 88018% of taxable income
R189 881 – R296 540: R34 178 + 26% of taxable income above R189 880
R296 541 – R410 460: R61 910 + 31% of taxable income above R296 540
R410 461 – R555 600: R97 225 + 36% of taxable income above R410 460
R555 601 – R708 310: R149 475 + 39% of taxable income above R555 600
R708 311 – R1 500 000: R209 032 + 41% of taxable income above R708 310
R1 500 001 and above: R533 625 + 45% of taxable income above R1 500 000
Below age 65 R75 750
Age 65 to below 75 R117 300
Age 75 and older R 131 150
Trusts other than special trusts: Rate of tax 45%