No relief for taxpayers in this year’s budget

By Staff Writer

By Johan Swart – Tax Manager at Legal & Tax Services

Finance Minister Pravin Gordhan has offered little in the way of tax relief for your pockets in the 2011 budget that contains few surprises. With a budget deficit of about 5% to fill, the Minister had little space to move this year. Compensation for inflation in the personal tax tables for 2011 is minimal, and the Minister has resorted to some alternative methods to raise more indirect tax from the South African consumer. The one good thing was the additional tax relief announced for persons over 75 years of age. As many of our pensioners rely on interest income, the additional relief compensates for the lower interest rates on investments.

One example of this is a general fuel levy increase of 10 cents a litre of petrol and diesel from April 6 and an increase in the Road Accident Fund (RAF) levy of eight cents to a litre. This is an extra cost burden the struggling person in the street cannot afford, with an increasing oil price and the introduction of tolls on Gauteng roads already driving transport costs and inflation up. In view of the current oil price, it might have been wise to at least postpone the increase in these levies until the oil price has stabilised, or started to decrease with the onset of summer in America and Europe, when their demand for oil declines.

Don’t expect to take refuge from the financial pain in one of your usual vices. As is customary, the budget includes hefty increases to the sin taxes you pay on your smokes and your tipple. A box of 20 cigarettes will now be 80 cents more expensive.

If you thought of boosting your earnings by gambling, at the casino or on the lotto, you will now pay a 15% tax on any winnings you make above R25,000, from 1 April 2012. In the past, gambling winnings were tax free. There is also not much to celebrate in the budget this year if you are one of the many South Africans that depends on a social grant to live. Increases to pensions and child support grants were fairly small this year, only just keeping ahead of inflation.

Minister Gordhan had been expected to provide more details about how Government will fund the national health insurance (NHI) plan. However, he merely alluded to VAT and PAYE increases as possible ways of funding the NHI, and we’ll only learn the details in the next budget.

On the whole, the Finance Minister has carefully balanced the books for South Africa’s budget. He has found some money to pay for new initiatives, such as a wage subsidy scheme for companies that employ young workers, without needing to increase direct taxation. But this will come as little comfort to people who are already struggling to make ends meet in a tough economic climate.

Recent Articles

Featured Your guide to debt counselling

The National Credit Regulator (NCR) reported more than 20 million consumers to be in debt in 2018 and 40% of them were behind with their payments. Due to the economic conditions in the country, many consumers find themselves incurring too much debt that they cannot repay.

Read more

Should you take a sabbatical this year?

In South Africa, sabbaticals are not as common among the general workforce – but they have become popular among executives and CEO’s. Justmoney finds out what a sabbatical is, how to convince your employer to let you take one, and how to manage your finances before and while you’re away.

Read more

A photographer’s journey into entrepreneurship

This week Justmoney chatted to this 25-year-old to understand what makes her tick, what her thoughts on money management are, and the financial advice she has for other young entrepreneurs.

Read more

Travel insurance through medical aid: Is it enough?

Having travel insurance as an added benefit with your medical aid is common practise, but what does it cover and is it enough?

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

Steers Varsity Cup Monday Madness

Price: R59
When: Mondays
Where: Kimberly

Old Mutual Actuarial Bursary

Price: R0
When: 26 March - 30 May
Where: Nationwide

Tsogo SunBreaks Vacay Special

Price: R1,115 per room
When: 15 -31 March
Where: Gauteng, Cape Town, and Durban