Against a backdrop of tough economic times, Finance Minister Tito Mboweni walked a tightrope between appeasing taxpayers and managing the fiscus.
Below, tax experts unpack key aspects of his maiden Budget address.
Personal income tax
The announcement that there would be no increases in income tax rates and that VAT would remain unchanged was welcomed, as government sought to limit the negative effects of tax hikes on an already struggling economy.
“In contrast to what we have become accustomed to over the past few years, there will also be no adjustment to the individual tax tables to take the effects of inflation into account,” said Barry Knoetze, Associate Director, PwC Tax.
Despite speculation regarding medical tax credit to taxpayers belonging to medical schemes, Mboweni also made no changes regarding this credit.
National Treasury will this year publish a draft Environmental Fiscal Reform Policy paper outlining options for environmental fiscal reforms, the finance minister announced.
Alwina Brand, PwC Tax Partner, welcomed the news, “considering the role of new taxes or incentives to address the promotion of efficient water use, the reduction of waste and the encouragement of improvements in waste management”.
Brand added: “Equally, in step with global trends, government will investigate a tax on ‘single-use’ plastics including straws, caps, beverage cups and lids, and containers to curb their use and encourage recycling.”
Government said it required more time to collaborate with the Collective Investment Schemes Industry to find solutions to the negative impacts of the proposed legislation, Brand noted.
“The cooperation between government and the Fund industry would be welcome news for the investor public, she said.
The Collective Investment Scheme industry provides the public with access to listed instruments, through a participatory interest in the total Collective Investment Scheme portfolio, which normally comprises listed shares, bonds and similar products.
“Public comment to the draft legislation emphasised the negative impact that such a change in tax policy would have on the Fund industry and the South African savings culture at large,” she said.