Johannesburg - The personal income tax relief outlined in
Finance Minister Pravin Gordhan
's budget speech is not enough to cover rising
inflation, PricewaterhouseCoopers (PwC) said on Wednesday.
Accountant Christo Paxton said in a statement that while
the personal income tax relief of R9.3bn was welcome, the difference it would make
to taxpayers' pockets was limited.
About 40% of the tax relief went to South Africans
earning below R250 000 a year.
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"When comparing an individual's tax liability who
earns about R200 000 per year, the individual will have an additional R106 extra
in their pockets every month.
"This barely covers the ever-rising cost of fuel and
A person earning around R700 000 annually would have an
extra R370 in their pockets each month.
"This is not quite enough to compensate us for the
effects of inflation," Paxton said.
Gordhan's budget increased the tax-free, lump-sum amount
paid out of retirement funds from R315 000 to R500 000, in favour of lower
income members who did not benefit from deductible contributions.
PwC tax consultant Avisha Gajadhar said this was a
generous increase of 58.7%.
"However, the top bracket did not increase
substantially in comparison - increasing from R945 000 to R1 015 000."
This amounted to a mere 19.6% increase.
"This is clearly in line with the government's
continued efforts to encourage individuals to save for retirement, particularly
those in the lower income brackets," Gajadhar said.