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 More than just selling – being an entrepreneur at a market

It only takes a couple of seconds for Sheryl Ozinsky, co-founder of the Oranjezicht City Farm (OZCF) Market, to tell whether an entrepreneur will succeed as a local trader. By looking at their body language, she immediately gets a sense of whether they’re going to engage well with their clients and handle the demands of trading at a market.

Read more

22seven: Worth a try?

We live in an era where there is an app for everything. From monitoring your heart rate and menstrual cycle to tracking your sleeping habits and your monthly budget. While this may seem invasive being made aware of your spending habits and where you may be overstepping your budget, it is the best way to rectify and cultivate better financial health.

Read more

My two cents on the Nedbank MobiMoney account

In November last year Nedbank, launched a mobile account called MobiMoney. This account is similar to one of its existing accounts called Send Imali.  However, it’s not only limited to existing Nedbank clients. 

Read more

The cost of being sick in South Africa

Finding affordable healthcare in South Africa is possible, but it comes with its own challenges. Justmoney contacted 13 doctors in Cape Town to find out how much an appointment costs. We also found out how medical schemes assist with these costs, and we compared South Africa with its BRICS counterparts.

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

Obz Cafe Cocktail Special

Price: R55-R59
When: Tuesdays-Fridays
Where: Cape Town

Telkom January Big Deal

Price: R807 pm
When: Until 31 January
Where: Nationwide

Planet Fitness Special

Price: R199
When: Daily
Where: Nationwide