Budget brings tax relief

While smokers and drinkers will pay more in tax, individual taxpayers will be paying a little less.

Finance Minister Tito Mboweni assured the nation in his recent Budget Speech that government was working hard to ensure the economy recovers, despite the Coronavirus Disease (COVID-19) pandemic.

Before his speech, Minister Mboweni took to social media to ask South Africans for tips to help craft the budget. Many of the people who responded said they were concerned about the tax increase announced in October last year.

They were given some good news when Minister Mboweni said tax increases would be kept to a minimum and that the tax measures spoken about in October would not be introduced.

Tax collection:

• R1.21 trillion will be collected in taxes during 2020/21, which is about R213 billion less than 2020 Budget expectations. This is the largest tax shortfall on record.
• The 5% increase in personal income tax brackets will provide R2.2 billion in tax relief, mainly for lower and middle income households. This means that if you earn above the new tax free threshold of R87 300, you will have at least an extra R756 in your pocket.

Fuel:

• 27 cents increase on a litre. The increase comprises 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.

Sin tax:

• An 8% increase in the excise duties on alcohol and tobacco products.
• 340ml can of beer or cider will cost an extra 14c.
• 750ml bottle of wine will cost an extra 26c.
• 750ml bottle of sparkling wine an extra 86c.
• 750ml bottle of spirits will increase by R5.50.
• 20 cigarettes will be an extra R1.39c.
• 25 grams of piped tobacco will cost an extra 47c.

COVID-19:

• More than R10 billion has been allocated to buy and deliver vaccines over the next two years. Of this, R2.4 billion will go to provincial departments of health to run the vaccine programme.
• R12 billion has been put aside in case there is a need to buy more vaccines or to cater for other emergencies.
• Social security:
• R3.5 billion for provincial departments of social development to improve access to early childhood development services.
• R6.3 billion is allocated to extend the special COVID-19 Social Relief of Distress Grants until the end of April 2021.
• R678.3 million is earmarked for provincial departments of social development and basic education to continue giving free sanitary products to learners from low-income households.
• Social grant increases:
• R30 increase in old age, disability and care dependency grants (now R1 890).
• R30 more for war veterans (now R1 910).
• R10 increase in child support grants (now R460).
• R10 increase in foster care grants (now R1 050).

Job creation:

• Nearly R100 billion will be spent creating jobs. During the Special Adjustments Budget last year, R83.2 billion was made available for public employment programmes. This year, R11 billion is being added for the Presidential Youth Employment Initiative.

Land restitution:

• R9.3 billion will be used to finalise 1 409 restitution claims over the next three years.
• R896.7 million has been set aside by the Department of Agriculture, Land Reform and Rural Development for post-settlement support.

Small businesses:

• R4 billion has been allocated to the Department of Small Business Development for township and rural enterprises.