Photo: GCIS / Flickr
Tito Mboweni’s Budget Speech made for compelling viewing earlier – and the Finance Minister says a 5% shift for income tax brackets is ‘good news for all’.
Photo: GCIS / Flickr
Call it PTSD, or a pervading sense of cynicism that comes with being South African, but every Budget Speech these days is met with a feeling of dread amongst the public. However, despite several realistic acknowledgments of our ailing economy, Tito Mboweni also brought some positivity to the house – largely thanks to his income tax announcement.
The Finance Minister stated that the personal income tax brackets would be increased by 5%, going over the rate of inflation. Mboweni elaborated on the decision, explaining that previous tax hikes haven’t yielded the results Treasury had hoped for. Therefore, pushing the brackets out further will ease financial pressure on ‘millions of households’.
The Treasury said an adjustment to personal income tax brackets and rebates would flow to lower-and middle-income households the most. The government will make up for the shortfall ‘through an increase in excise duties’, Mboweni stated.
The price of alcohol and cigarettes, for example, will now be hiked from April onwards.
In his Budget Speech, Minister Mboweni even claimed that anyone earning above the tax-free threshold of R87 300 will feel the financial benefits, gaining an extra R756 from their wages over the next 12 months.
“Personal income tax brackets will be increased by 5%, which is more than inflation. This will provide R2.2 billion in tax relief. Most of that relief will reduce the tax burden on lower and middle-income households. This means that if you are earning above the new tax-free threshold of R87 300, you’ll have at least an extra R756 in your pocket after 1 March.”
“Further increases in personal income taxes would put pressure on households that have been negatively affected by the pandemic, undermining the chance of a strong economic recovery. There is no compelling case for increasing these rates at this time. Previous tax increases raised less revenue than anticipated, and had a negative impact on economic growth.”Tito Mboweni
Minister Mboweni: The personal income tax brackets will be increased by 5 per cent, which is more than inflation. This will provide R2.2 billion in tax relief. Most of that relief will reduce the tax burden on the lower and middle-income— Parliament of RSA (@ParliamentofRSA) February 24, 2021