What can we expect from the Budget in 2015?
Head of growth market solutions at Sanlam Personal Finance Karin Muller, explained that the national budget is similar to your personal household budget. "The budget speech contains an income section (taxes), which refers to where the Government gets its money from and an expenses section, which looks at how the Government will spend its money. The expenses section deals with how our collective tax money will be spent to provide services to all of us."
It's no secret that the government needs more money. It's just a case of where and how they will ask for it. Will they raise taxes on the rich? Will there be massive increase in sin taxes? What about an extra increase in fuel?
Last week the South African Institute of Professional Accountants (SAIPA) said that Minister of Finance, Nhlanhla Nene, will have a tough time trying to find the much needed revenue.
"The bottom line is that the Minister faces the prospect of less tax revenue than government needs. How he attempts to resolve this dilemma will have far-reaching consequences," said Ettiene Retief, SAIPA chairperson of the National Tax and SARS Stakeholders Committees.
Ferdie Schneider, national head of tax at BDO South Africa said: "In his Medium Term Budget Speech, Minister Nene emphasised that government's revenue shortfall is of paramount importance. Taxation as a method of revenue generation is off-course most likely to be made use of."
Keith Engel, deputy chief executive at the South African Institute of Tax Professionals (SAIT), agrees that the Minister will be announcing changes that will allow Treasury to raise the R12 billion that it needs.
Why is more money needed?
Marc Sevitz, director at TaxTim explained: "I would expect a large infrastructure spend, the president has announced a nuclear project which will need huge resources which the minister will have to find from somewhere else or risk borrowing more.
"SOEs are expected to receive more money this budget and further resources will be devoted to social spending and education as per normal. The minister will offset these most likely in a rise in CGT, dividends tax and probably an increase in the highest marginal tax rate to 42%, with a rise in the VAT rate unlikely.
"I would imagine that the Minister is going to clamp down on government expenditure for frivolous items so I am hoping to see more of that and a tightening of the Public Finance Management Act in order to ensure there is no wasteful expenditure at the municipal level. I am hoping for some major changes to the Small Business Tax Regime for income tax and VAT in order to kick-start SMME development, but remain very cautious on this front," added Sevitz.
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You may be considering settling your credit account, whether it’s a credit card or various store accounts, now may be as good a time as any. This especially if you have saved, or you received a tax return or salary bonus.
Can you afford a personal loan?
Taking out new debt is not always a choice. However, if you’re not pressed by a medical emergency or an unforeseen disaster, it’s worthwhile considering whether you can actually afford it. But what does it mean to “be able to afford a personal loan”? What percentage of your income should you not exceed dedicating to it?
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