Minister Enoch Godongwana (Photo: Jairus Mmutle/GCIS)
In his budget for the next three years, Enoch Godongwana, the minister of finance, spared the rod slightly in terms of taxes.
Unlike the last two years, the personal tax categories are also adjusted for inflation. This means that taxpayers are not taxed more heavily if they get salary adjustments that are in line with the rate of inflation.
Because the government shortchanged taxpayers for the past two years by not adjusting the categories for inflation, the portion of government revenue that comes from personal taxes has grown relative to other types of taxes.
(Bron: National Treasury)
Currently, the top 13% of individual taxpayers pay more than 60% of total income from personal taxes. The top 7.7% of individuals, whose taxable income is more than R1 million per year, pay almost half of the personal tax.
Personal and company taxes in South Africa are higher than the average in the countries belonging to the Organization for Economic Co-operation and Development. Together, the states’ income from the two sources in 2023 produced around 55% of the total tax income.
In 2018, it was calculated that the individuals in the top four personal tax categories pay an additional 75% of the VAT income.
The national treasury recognizes in the budget review that it is important to properly manage this heavy tax burden to ensure its sustainability and effectiveness.
“Direct taxation reduces disposable income and consumption spending and can encourage people to try to avoid taxes. There comes a point where further tax increases no longer provide additional revenue and economic growth is stunted. The best option is to increase tax revenue by expanding the base of taxpayers and achieve economic growth.”
In last year’s budget, the possibility of raising an extra R20 billion with increased taxes was raised, but thanks to the fact that the government’s finances look better overall, this proposal was withdrawn.
Medical credits are also adjusted to keep pace with inflation.
Small businesses can benefit from the adjustment in the threshold for compulsory VAT registration and for tax on turnover, both from R1 million to R2.3 million. These figures were last adjusted in 2009.
Major adjustments have also been made to various limits and thresholds, which include:
- Annual limit on tax-free investments of R36 000 to R46 000.
- Annual limit on tax-free donations by entities from R10 000 to R20 000.
- Annual limit on tax-free donations by individuals from R100 000 to R150 000.
(Bron: National Treasury)
Various limits on tax-free employment benefits such as bursaries and loans to staff have also been significantly increased.
Sin tax, fuel
(Source: National Treasury)
Sin tax on alcoholic beverages, tobacco and vaping products is increased with the inflation rate of 3.4%.
The fuel levy is increased by less than the inflation rate and will be R4,10/ℓ on petrol and R3,93/ℓ for diesel. The charges on fuel for the Road Accident Fund increase by 7c/ℓ to R2,25/ℓ.
Carbon tax is increased from R236 per tonne of carbon dioxide equivalent to R308 per tonne and the carbon levy on fuel increased by 19c/ℓ for petrol and 23c/ℓ for diesel. This is in line with the inflation rate.
