Did you know this about the new budget?
A rise in sin tax, petrol tax and an introduction of a sugar tax marked the budget speech of finance minister Pravin Gordhan on Wednesday, February 24.
Gordhan raised a number of points to be tackled in the budget for 2016/17.
He noted how the South African economy is negatively affected by the slowing global economic growth, the slump in commodities demand and prices as well as the country’s worst drought in 111 years.
The minister’s main tax proposals include the following:
- Personal income tax relief of R5.5 billion, focused mainly on lower and middle-income earners.
- An increase in the monthly medical tax credit allowances.
- An increase of 30 cents a litre in the general fuel levy.
- Introduction of a tyre levy to finance recycling programmes, increases in the incandescent globe tax, the plastic bag levy and the motor vehicle emissions tax.
- Introduction of a tax on sugar-sweetened beverages.
- Increases of between six and 8.5 per cent in the duties on alcoholic beverages and tobacco products.
The amounts budgeted for several sectors within the country, including the farming sector, water-stressed communities, social grant dependants, higher education, medical care, energy investment and public order, will be increased over this year and the following two.
In light of the economic circumstances in SA and the globe, Gordhan said the budget deficit would be reduced to 2.4 per cent by 2018/19.
“Our current taxes on wealth are under review by the Davis Committee,” Gordhan added.
Gordhan said state-owned companies (SOC) which were no longer relevant would be phased out over the following years, iterating President Jacob Zuma’s sentiment.
“The asset base of state owned entities is over R1 trillion, equivalent to about 27 per cent of gross domestic product (GDP),” Gordhan said.
“They maintain networks and provide services – power, roads, transport, water, communications – on which the rest of the economy depends.
“The resources raised or saved will be redirected to the balance sheets of SOCs that should grow.”
Gordhan added that special attention would be given to cutting out tax-evation and corruption and said the government’s personnel expenditure would be reduced.
