Author: Jaco Leuvennink (Fin24.com).Cape Town – The government will raise an additional amount of R36bn in taxes in the coming fiscal year through an increase in the VAT rate to 15%, as well as below-inflation adjustments for personal income tax brackets.
That means the government will collect more income tax, but does it mean you will pay more or less income tax in the next year?
It all depends on increases in your salary over the next year. If your salary goes up, you will pay more, but if it stays the same, you will actually pay less.
Looking at the tax tables, people earning from R85 000 to R150 000 per annum will pay R432 per year less income tax.
People in the R200 000 to R250 000 per year bracket will pay R910 less in the year. And people earning from R300 000 to R2m per year will pay between R1 083 and R2 017 less per year.
But the fact that most people’s salaries will go up in the course of the year means the taxman will collect more from taxpayers.
Adjusting tax brackets for inflation means the government is assured of receiving more or less the same amount in the next tax year. If the tax brackets are not adjusted, or adjusted in a limited way, as the case is this year, it actually means that the income tax burden is increased.
Although individuals might initially be paying less income tax, it does not mean that tax relief was given.
Source: Fin24.com