South Africans will soon have a few extra Rands in their pockets after Finance Minister Tito Mboweni went against widespread expectations and announced personal income tax relief measures.
Analysts had predicted that the cash-strapped government would introduce higher taxes, including in value added tax (VAT), in the 2020/2021 budget.
However, Mboweni said early in his budget speech in Parliament on Wednesday that there will be no major tax increases, much to the relief of many South Africans.
R3,400-a-year tax relief for teachers
He said, “Indeed, there is some real personal income tax relief. This Budget means that a teacher who earns on average R460,000 a year will see their taxes reduced by nearly R3,400 a year.
“Hardworking tax payers, who earn on average R265,000 a year, will see their income tax reduced by over R1,500 a year.”
Mboweni added that those earning R10,000 per month will pay 10% less in tax while those earning R100,000 per month will pay about 1.5% less.
Startups and small businesses will also continue to enjoy tax reliefs through the preferential small business tax regime, the VAT registration threshold and the turnover tax.
Fuel levy to increase
Prospective homeowners will also welcome Mboweni’s announcement that properties worth R1 million or less will no longer be subject to transfer duty.
However, motorists will feel a slight pinch because Mboweni announced that the fuel levy will increase by 25 cents per litre.
Of this, 16 cents is for the general fuel levy while nine cents is for the Road Accident Fund levy. This means fuel prices will ultimately increase to factor in the changes.
Prior to the budget, Mboweni made calls on Twitter for “independent churches” to start paying taxes.
In his budget speech, he said, “There will be a renewed focus on illicit and criminal activity, including non-compliance by some religious public benefit organisations.
“Religious bodies must operate within the strict boundaries of the law if they are to enjoy tax exempt status.”