Personal tax increases will provide R2.2 billion in tax relief, according to Finance Minister Tito Mboweni.
CAPE TOWN – Personal tax increases will provide R2.2 billion in tax relief, according to Finance Minister Tito Mboweni.
Mbowni said on Wednesday that the government is expected to collect R1.21 trillion in taxes during 2020/21, which is about R213 billion less than the 2020 Budget expectations.
This is the largest tax shortfall on record, according to Mboweni.
In 2021/22 government expects to collect R1.37 trillion, provided that the underlying assumptions on the performance of the economy and tax base hold.
Mboweni also thanked those South Africans who diligently continue to pay their taxes.
NEW TAX PROPOSALS
The corporate income tax rate will be lowered to 27% for companies with years of assessment commencing on or after 1 April 2022. This will be done alongside a broadening of the corporate income tax base by limiting interest deductions and assessed losses.
“We will give consideration to further rate decreases to make our tax system more attractive. Government will do this in a revenue-neutral manner,” Mboweni told MPs
“Government also intends to leverage the insights of the Davis Tax Committee as we undertake this reform.”
The personal income tax brackets will be increased by 5%, which is more than inflation. This will provide R2.2 billion in tax relief. Most of that relief will reduce the tax burden on the lower and middle-income households.
This means that if you are earning above the new tax-free threshold of R87 300, you will have at least an extra R756 in your pocket after 1 March 2021, according to Mboweni.
Fuel levies will increase by 27 cents per litre, comprising 15 cents per litre for the general fuel levy, 11 cents per litre for the Road Accident Fund levy and 1 cent per litre for the carbon fuel levy.
This is a developing story…