South Africans will have to tighten their belts. Minister of Finance Nhlanhla Nene delivered more bad news than good news during the 2015 Budget speech.
With government missing its tax target, South Africans are in for both double dose of higher taxes and lower-than-expected state spending. Here is the breakdown of the 2015 budget speech.
• If you pay income tax
• Nene is promising everyone earning less than R450 000 a year an effective tax cut. The top one million taxpayers, who already pay more than 60 per cent of income tax, will pay more.
• The plan is to increase the tax rate for everyone by one percentage point while tax credits on medical scheme contributions and adjustments to the tax brackets effectively lead to lower tax. If you have taxable income of R100 000 a year, you end up paying R531 less in tax. And if you earn R1 million a year, you pay
R4 550 more.
• If they are earning more than R181 900 a year, this will actually only hit people earning more than R450 000. One per cent, and according to Nene it is a very small amount to pay.
• There has been speculation that South Africa will raise its VAT rate from 14 per cent to 15 per cent, but Nene said that Treasury is waiting on the Davis Commission to conclude its work on that and other possibilities.
Social grant.
• All the major grants, which include the old age and child care grant, will increase by only 4.4 per cent.
• The old age grant goes up from R1 350 to R1 410 per month (R60). The child care grant goes up from R315 to R330 per month (R15).
• Treasury expects to spend about R130 billion on grants this year, up from R120 billion.
If you own a car
• The general fuel levy has been raised by 30.5c/litre. The Road Accident Fund levy will also increase by 50c/litre, bringing total fuel levy increases to 80.5c/litre.
• Nene is exploiting the oil prices by raising both the general fuel levy and the road accident fund (RAF) levy. That makes taxes shoot up from about 28 per cent of the fuel price – to more than 40 per cent.
• At the moment every litre of petrol includes R2.25 for the levy and R1.04 for the RAF. That is about to become R2.55 and R1.54. For diesel the levy jump is from R2.10 To R2.40.
• Treasury thinks this will give it an extra R6.5 billion.
Eskom
• Nene informed that Eskom will receive R23 billion. However, it will receive R10 billion around June and the rest by the end of the year.
• The tax on electricity is also going up temporarily.
•Since 2010 there has been a levy of 3.5c on every kwh of electricity sold.
• That will go up to 5.5c until the carbon tax kicks in in 2016.
The good news is that the extra revenue will be used to fund bigger incentives for energy efficiency.
Education, sport and culture
• Over R640 billion will be allocated to basic education during the next three years.
• The number of qualified teachers entering the public service is projected to increase from 8 227 in 2012/13 to 10 200 in 2017/18.
• To support teacher training, R3.1 billion will be awarded in funza lushaka bursaries over the next three years.
• The National Student Financial Aid Scheme is projected to spend R11.9 billion in 2017/18, up from R9.2 billion in 2014/15.
Taxes Up
• Smokers will be burning up an extra 82 cents for every pack of 20
• A bottle of wine will cost 15 cents more
• Sparkling wine will cost an extra 48 cents per bottle
• A quart of beer is going up by 15,5 cents
• Whisky lovers will pay R3,77 more per bottle
Property
• The rates and brackets for transfer duties on the sale of property will be adjusted to provide relief to middle-income households.
• The new rates eliminate transfer duty on properties below R750 000, while the rate on properties above R2.2 million will increase.