Budget 2016: Consumers will feel relieved over tax - expert

Cape Town - From a tax point of view consumers should feel slightly relieved after Pravin Gordhan's budget speech, says Sanlam head of growth market solutions Karin Muller.

Any mention of tax changes is guaranteed to make most people sit up and listen to the national budget speech, but Muller says it is important to understand the budget as a whole because it affects consumers' everyday lives. 

LISTEN: Muller weighs in on the budget speech and how the average consumer is affected

Retirement funds

David Gluckman, head of special projects at Sanlam Employee Benefits says Minister was able to balance the budget without increasing the maximum marginal tax rate or VAT.

He has however increased the capital gains inclusion rate as well as transfer duty, according to Gluckman.

"The government remains committed to its retirement reform objectives as announced in the 2014 budget update. A few measures were introduced to correct anomalies in respect of the introduction of T-Day contained in a Revenue Laws Amendment Bill released today," he said.

"Arguably the most important provision in this Bill is the postponement of compulsory annuitisation upon retirement from provident funds to 1 March 2018."

Other key elements in respect of retirement reform include:

•         Mandation or auto-enrolment;
•         Improving fund disclosures and reducing costs;
•         Default regulations will be published later this year;
•         Consolidating the number of funds;
•         Simplifying retirement savings products and enabling portability between providers;
•         Ensuring effective intermediation

"What is interesting to note is that preservation is no longer a key priority in contrast to 2015 when it was listed as a priority," according to Gluckman.