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JOHANNESBURG – The National Treasury on Wednesday unveiled various proposals including hiking the tax-free threshold for personal income tax.

The Treasury said taxes would go up by R15 billion in the 2019/20 financial year and R10bn in 2020/21.

It said the hikes were a result of a projected R15bn shortfall in tax collection that had been partly self-inflicted by the South African Revenue Service (Sars).

It said the shortfall had been revised down by R15.4bn to R42bn in 2018/19 compared to the R27.4bn that was forecast in the Medium Term Budget Policy Statement.

The Treasury said the weak economy also led to a moderation in income tax received with lower output from the mining, quarrying and financial sectors.

“Job losses, lower wage settlements and reduced bonuses have put pressure on withholding taxes on earnings. 

“Higher diesel refund payments to electricity generation plants and primary producers, such as farmers and mining companies, have slowed fuel levy collections,” it said.

The Treasury said value-added tax (VAT) collections had slowed since October when the Sars accelerated payment refunds.

It said the tax-free threshold would be increased to R79 000 from R78 150 with no changes to personal income tax brackets.

“This is expected to raise R12.8 billion in revenue, as individuals with an inflationary increase in their taxable income face a larger tax burden,” it said.

The Treasury proposed a fuel levy hike of 29c a litre, consisting of a 15c a litre increase in the general fuel levy,  5c in the Road Accident Fund (RAF) levy and the introduction of a carbon tax on fuel of 9c a litre.

It also proposed increasing excise duties on alcohol and tobacco products by between 7.4 percent and 9 percent, and also hiking the eligible income bands for the employment tax incentive.

The government introduced a one percentage point increase in the VAT rate which took effect in April last year.

But it also increased the number of zero-rated items in the Medium-Term Budget Policy Statement in October to include white bread flour, cake flour and sanitary pads.

The government also introduced a health promotion levy on beverages with more than 4 grams of sugar content per 100ml. 

It also applied a  tax of 2.1c for every gram of sugar, beyond the first gram which is levy-free. 

The government said the levy would increase to 2.21c per gram in April to avoid an erosion in the value of the tax due to inflation.