17 Feb 2010
Gordhan gives taxpayers a break
By Times Live, Marcia Klein
Gordhan gives taxpayers a break But tax relief could be offset by inflation Feb 17, 2010 11:52 PM | By MARCIA KLEIN
South Africans were given tax relief of R6. 5-billion in the Budget. Current Font Size: Tougher approach to small companies, especially cash-based businesses who avoid paying VAT Jacob Zuma Related Multimedia AUDIO Pravin Gordhan gets a cheer from opposition AUDIO 2010 Budget speech predictions AUDIO Gordhan''s first Medium Term Budget Related Articles Ministries get R71bn Pravin edges closer to R1-trillion mark Gordhan proposes wage subsidies Wage subsidies could be introduced next year
But this will not make much difference to the lives of most because the tax relief will largely offset the effects of inflation.
In addition, people will have to pay more for cigarettes and alcohol, and there is a higher fuel levy.
Finance Minister Pravin Gordhan said: "We do not propose to raise the overall tax burden this year. "
He said the annual tax-free interest income will be increased from R21000 to R22300 for people under 65 and from R30000 to R32000 for people 65 and over.
Fuel taxes will increase by 25. 5c/litre, including a 7. 5c/litre increase to help fund the new petroleum pipeline between Durban and Gauteng, and an increase of 8c/litre in the road accident fund levy.
Smokers will pay R1. 24 more for a pack of cigarettes, a 750ml bottle of beer goes up by 12c, and a bottle of spirits increases R2. 22.
Gordhan also announced a carbon emissions tax on new cars.
Deloitte partner Jed Michaletos said the Budget was similar to last year in terms of tax breaks, but the major beneficiaries were lower-income earners.
Gamblers will be shocked to hear that Gordhan said he might tax punters'' winnings.
He also announced a tougher approach to small companies, especially cash-based businesses who avoid paying VAT.
The SA Revenue Service would do this "using third-party information, and targeted lifestyle audits".
He announced that R89-billion will be spent on social grants, with a phased extension of the child support grant up to a child''s 18th birthday. The state old age pension and the disability grant rises by R70 to R1080 a month. The child support grant increases by R10 to R250 a month.
Gordhan''s most depressing news for South Africans was his bleak outlook for job creation.
The Budget review said that: "Job creation is likely to be weak in the short term. The moderate recovery outlined in the Budget is projected to create just over 1million jobs in the next five years, and would result in only a marginal decline in the number of unemployed people and the unemployment rate by 2014. "
Though Gordhan did not increase taxes this year, he has not ruled out increases in future, saying "we may have to raise taxes in future to fund our public spending commitments".
Azola Lowan, senior research analyst at Advantage Asset Managers, said the Budget did not create enough incentive for saving in South Africa.
But she was happy with the carbon emissions tax, saying it would change behaviour.
Lowan said there was some concern that the increased fuel levy would place an additional strain on people, but that there was no indication, looking at pot-holed and poor roads, that previous levies had been spent wisely.