Budget Review: Everything you need to know about how Budget2019 affects your pocket

2019-02-28 07:14 - Carin Smith
 Banknotes of the South African rand

In his Budget 2019, Finance Minister Tito Mboweni announced that there would be no increases in income tax rates and the VAT rate would remain unchanged - which some experts anticipated.

But since no adjustment has been made for inflation, this means if you receive an increase from your employer, you will actually be paying more tax in real terms.

The latest National Treasury statistics report that South Africa has 7.6 million registered taxpayers, and these same statistics report that 82.6% of expected income tax collections for 2019/2020 will be payable by only 2.1 million registered taxpayers.  

In total, Budget 2019 includes proposals to raise R15bn in additional tax revenue for the 2019/2020 financial year. This will boost total estimated tax revenues to R1.4trn in 2019/2020.

Treasury is, however, expecting a revenue shortfall of R42.8bn.

Compared to significant tax increases in the last four years' Budgets, Mboweni's maiden budget speech appears to show an acceptance that taxation levels in SA have reached a tax ceiling in terms of how much more South Africans can be taxed, according to Melanie Milleskie, tax expert at Deloitte Africa.

Even Parliament heard that there is no more room for tax increases.

Bracket creep

Ahead of the Budget, experts warned taxpayers that Treasury would try to take full advantage of so-called "bracket creep".

This means that not raising personal income tax brackets leads to more individuals possibly falling into a higher tax bracket if they receive salary increases.

The tax-free threshold has been upped slightly from R78 150 to R79 000.

Medical tax credits

No changes have been made to the monthly medical tax credits for medical scheme contributions.

This measure will have a similar effect to bracket creep and is expected to raise a further estimated R1bn.

Tax free investments

There was no mention of any increases to the limits on tax-free investments or incentives to promote retirement fund savings.

Pain for road users

Mboweni did not increase fuel levies above inflation, as has been the case in previous years.

In total, motorists will be paying R5.63 in taxes for every litre of petrol bought from June 5, and R5.49 for every litre of diesel. This is an increase from R5.34 and R5.19 respectively in the 2018/19 financial year.

Carbon tax

There have been largely negative reactions to Mboweni's announcement that a Carbon Tax - which forms part of government's efforts to deal with climate change - will be instituted in early June on petrol and diesel.

Pay for your sins

Sin taxes on alcohol and tobacco will rise by above-inflation rate of between 7.4% and 9%, and are expected to bring in an additional R1bn in Treasury.

Big Brother is watching you

Don't think that by putting money into offshore structures, you are safe from the tax man.

On the property front

Transfer duty and capital gains tax have remained unchanged.

Green tax

Government will investigate a tax on "single-use" plastics including straws, caps, beverage cups and lids, and containers to curb their use and encourage recycling.