Budget 2017: Gordhan announces hard-hitting personal tax increases

Finance Minister Pravin Gordhan has announced hard-hitting increases in personal income tax of R16.5bn for 2017-18‚ as economic growth stutters and revenue collection falls short of expectations.
These increases are part of a total R28bn package of tax hikes.
Budget 2017: Rich to bear the brunt of the tax increases The wealthiest South Africans will pick up the tab for the South African Revenue Service's inability to outstrip economic growth in revenue collection.
Tax revenue has deteriorated by a further R7bn since the medium-term budget policy statement in October and is now forecast to be R30.4bn lower than the 2016-17 budget estimate‚ indicating a deterioration in economic growth and tax buoyancy.
This is the largest underperformance since the 2009 recession and Gordhan told journalists at a media briefing ahead of his budget speech in the National Assembly on Wednesday that he was concerned about the state of revenue collection in the country and had been engaging with senior management of the South African Revenue Service (SARS) about this.
Budget 2017: Brace yourself if you’re a drinker or smoker If you enjoy a cigarette with your rum and coke‚ your wallet will face a triple threat this year.
In his speech the minister warned SA was “at a crossroads” and “tough choices” had had to be made.
Treasury officials warn there are “significant risks” to revenue collection and economic growth in the period ahead and that these remain high.
The tax increases announced by the minister include a new top personal income tax rate of 45% for the estimated 100‚000 individuals with taxable incomes above R1.5m‚ which will raise R4.4bn. The previous top bracket of 41% was set at R701‚301.
Budget 2017: Pain at the petrol pump Motorists will pay an extra 39 cents for fuel in April after Finance Minister Pravin Gordhan announced increases in both the fuel and Road Accident Fund levies in his budget.
Limited relief is provided for fiscal drag: the withholding tax on dividends will increase from 15% to 20% and the general fuel levy‚ the Road Accident Fund levy and excise duties for alcohol and tobacco will also rise.
Total tax increases of R28bn are required to fill the gaping hole in government finances and are necessary for government to maintain what Treasury described as a “measured‚ prudent course of fiscal consolidation”. This aims to narrow the budget deficit and stabilise debt.
Budget 2017: Schools the big winners Education – primarily at school level - gets the biggest chunk of Finance Minister Pravin Gordhan’s one and a half trillion rand budget.
A further R15bn in tax increases will be announced in next year’s budget.
“The budget reflects a balance between maintaining our spending commitments and ensuring long-term health of the public finances‚” Gordhan said.
Budget 2017: R90 a month increase in old age‚ disability grants While Finance Minister Pravin Gordhan has announced increases to social grants‚ the uncertainty around how beneficiaries will be paid come April 1st remains.
He said during the media briefing that the global context was “extremely uncertain” but there were promising “green shoots” of hope in the local economy.
READ: Pravin Gordhan's full #Budget2017 speech Read Finance Minister Pravin Gordhan's full 2017 budget speech presented in Parliament on Wednesday.
How much you’ll have to pay the taxman
Tables courtesy SARS - click here for more information
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