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R5.2 billion tax relief, but sin taxes in the country are going up

The government has come to the aid of consumers by implementing R5.2 billion tax relief measures in the National Budget. Photo: File

The government has come to the aid of consumers by implementing R5.2 billion tax relief measures in the National Budget. Photo: File

Published Feb 24, 2022


THE GOVERNMENT has come to the aid of consumers by implementing R5.2 billion tax relief measures in the National Budget.

Finance Minister Enoch Godongwana said yesterday that the general fuel and Road Accident Fund levy (RAF) would not be adjusted as the government aimed to support households, and in light of already high fuel prices.

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He also adjusted personal income tax brackets and rebates to take inflation into account.

Personal income tax brackets were adjusted in line with an expected inflation rate of 4.5 percent for the financial year.

“The adjustments will mean that the annual tax-free threshold for a person under the age of 65 is to increase from R87 300 to R91 250,” Godongwana said.

Medical tax credits would increase from R332 to R347 per month for the first two members, and from R224 to R234 per month for additional members, he added.

According to National Treasury, if the personal income tax brackets had not been adjusted, revenue would have increased by R13.5bn.

“This relief is mainly targeted for individuals in the middle-income group,” it said.

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Treasury said domestic value-added tax (VAT) collections grew significantly in the past financial year, as household consumption was supported by stronger earnings and low-interest rates.

Another measure the government would implement to lessen the pressure for consumers was to provide tax relief of R3.5bn in the fuel levy.

Fuel prices had exceeded R20 per litre inland for unleaded petrol in December 2021 for the first time, due to higher crude oil prices and exchange rate depreciation.

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“To support consumers and the economic recovery, no increases will be made to the general fuel levy on petrol and diesel for 2022/23,” it said.

Treasury said there would also be no increase in the RAF levy.

In an effort to create an environment for businesses to grow, the government would restructure the corporate income tax system.

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As announced in the 2021 Budget, corporate income tax will be reduced from 28 percent to 27 percent for companies with years of assessment ending on or after March 31, 2023.

The government, however, once again raised a host of the so-called “sin” taxes.

Godongwana said the government also planned to increase excise duties on alcohol and tobacco by between 4.5 and 6.5 percent for 2022/23.

“The targeted excise burden for a 750ml bottle of wine will be 17c more expensive; a 340ml can of beer or cider will be 11c more; a bottle of sparkling wine will cost an additional 76c; and a bottle of spirits will be R4.83 more expensive. Cigarette prices will increase by R1.03; 25g of pipe tobacco will cost an extra 37c, and a 23g cigar will be R6.77 more.

“The government proposes to apply a flat excise duty rate of at least R2.90 per millilitre to both nicotine and non-nicotine products. These include vaping products,” the finance minister said.

But the South African sugar industry’s cries for the sugar tax to be scrapped fell on deaf ears, as the government intends to increase it.

Godongwana said beverages with more than 4g of sugar content per 100ml would rise by 2.21c per gram to 2.31c per gram from April 1, 2022.

The minister said the government was expected to collect tax revenue of R1.55 trillion for 2021/2022, surpassing pre-pandemic forecasts and bolstered by elevated commodity prices, which is R181bn more than in 2020.

Godongwana said the South African Revenue Service (Sars) had initiated a review of all businesses that had received payments from national and provincial governments over the past five years.

“The ongoing review has revealed a number of cases of non-compliance – and enabled Sars to register businesses that were not previously in the tax base, while boosting revenues.”

He said a new unit, which was dedicated to tracking high-wealth individuals who avoid paying tax, is taking shape.

Sars said yesterday it welcomed the upwardly revised revenue collection estimate announced by Godongwana.

Sars Commissioner Edward Kieswetter said: “We remain cautiously optimistic that we will meet the new revenue estimate. Sars will continue to work dutifully to fulfil its mandate of collecting all revenue that is due, in order to build a capable state that serves the well-being of all South Africans.”

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