In 2017 South Africans earning over R1.5 million a year will be added to an additional tax bracket that will add an extra R16.5 billion to the tax revenue. The new bracket will increase from 41% in 2016 to 45% in 2017.
This is expected to cover most of the the R28 billion shortfall. The rest will come from other sources says finance minister Pravin Gordhan. These sources are:
- Increase in dividend withholding tax rate from 15% to 20%
- A 30 cent per litre increase in the general fuel levy and a 9 cent per litre in road accident levy.
- Increase in the duties of alcohol and tobacco (sin tax) of 6% and 10%
Economists say there are no adjustments being made to VAT in the foreseeable future. Tax revenues have notably fallen much faster than expected according to Gordhan and has reduced its tax-revenue estimate from R1.175 trillion to R1.144 trillion. This has been described as the largest tax revenue shortfall relative to estimates since the 2009/10 recession.
While South Africa is “once again at a crossroads” and “tough choices have to be made to achieve development outcomes”, Gordhan nevertheless tried to stress the need for growth. Treasury estimated that the economy expanded by 0.5% in 2016 and forecast that it would grow by 1.3% in 2017 and 2% in 2018. It may not be a lot but its a start. With the prediction for Tax incentives to encourage corporates to invest in new infrastructure developments its a win-win situation for everyone involved. This means means that jobs will be created and help the economy grow.
To View “ Tax Implications from Budget speech” click here
The new tax rates for all Payslip Software will be posted on the Downloads page on 1 March
