Taxes that will hit your pocket

Maya Fisher-French
2017-02-22 15:18
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The bulk of the R28 billion increased tax revenue will come from personal income tax and higher dividend tax as National Treasury avoids the politically sensitive issue of an increase in Value Added Tax.

1. R16.5 billion more personal income tax: Although National Treasury announced a new tax bracket of 45% on individuals earning more than R1.5 million, as well as trusts, this will only provide R4.3 billion in additional revenue. The bulk of the increased personal tax revenue will come from “bracket creep” because the personal income tax tables will not be fully adjusted for inflation, reducing real income. In other words, after your inflation-adjusted salary increase is taxed, the amount of goods and services you can afford this year will be reduced.

2. R6.8 billion more tax on investments: Dividend withholding tax will be increased significantly from 15% to 20%. Although Treasury argues that this was necessary to close the arbitrage gap because the top bracket earners could switch to dividends in lieu of salary, it has the desired effect of raising an additional R6.8 billion in revenue. This makes tax-free investments such as retirement funds and tax-free savings accounts more attractive with the annual contribution rate for tax-free savings accounts lifted to R33 000.

3. R3.1 billion more tax on fuel: Treasury announced a significant increase in the fuel levy of 30c/l. This combined with the 9c/l Road Accident Fund levy means that for a 50-litre tank of petrol you will pay an extra R19.50, raising R3.1 billion in additional tax. As from April 5, motorists will pay a total of R2.85 tax for every litre of petrol or R142.50 per tank of petrol.

4. R1.9 billion more tax on sins: The usual sin taxes on alcohol and cigarettes will see you paying R1.06 more for a pack of cigarettes with R14.30 going to government for every pack of cigarettes you purchase. A bottle of wine will cost 23c more and a pack of beer 66c more.

5. Zero sugar tax, for now: National Treasury is still waiting for legislation to be approved by parliament but once it is approved the proposed tax rate will be 2.1c/gram of sugar on beverages with more than 4g/100ml. Once passed, a can of coke would cost around 82c more.

6. R448 million less tax on property transfer: In one of the few positive stories in this year’s budget for taxpayers, the duty-free threshold on the purchase of residential property will be increased from R750 000 to R900 000.


Maya Fisher-French
Personal finance journalist
City Press
p:0117139001
w:www.mayaonmoney.co.za  e: maya@askmaya.co.za
      
 
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