Cape Town – With tax revenue collection projected to be lower than initially anticipated, National Treasury has proposed numerous changes to the tax regime with the aim of reducing the budget deficit.
According to Treasury, the 2016 overall tax proposals will raise additional gross revenue of R18.1 billion in 2016/17, as well as narrow the budget deficit.
The additional amount comprises R9.5 billion through higher excise duties, the general fuel levy and other environmental taxes.
This comes as tax revenues in 2015/16 are projected to be R11.6 billion below the 2015 Budget forecast. Corporate income tax collection is estimated to be R13 billion lower, value-added tax (VAT) R5.7 billion lower and personal income tax R1.9 billion lower.
These lower revenue outcomes will be partially offset by an increase of R4.3 billion from customs duties.
In his Budget Speech on Wednesday, Finance Minister Pravin Gordhan said while there was a need to raise additional revenue and reduce the budget deficit, National Treasury has paid special attention to the fairness and inclusivity of the tax system.
“We have also been mindful of the need to moderate the impact of tax increases on households and firms in the present economic context.”
The tax proposals include:
- A personal income tax relief of R5.5 billion, which partially compensates for inflation, focused mainly on lower- and middle-income earners;
- An increase in the monthly medical tax credit allowances;
- An increase of 30 cents a litre in the general fuel levy; and
- Increases in the incandescent globe tax, the plastic bag levy and the motor vehicle emissions tax.
The Minister said that the Income Tax Act already contains measures to encourage provision of bursaries by employers to employees or their relatives.
“It is proposed that the income eligibility limits and qualifying bursary values should be increased. Inclusion of industry-based training organisations in the list of activities qualifying for tax exemption is also under consideration.
“Our current taxes on wealth are under review by the Davis Committee,” he said.
The Minister also said higher capital gains inclusion rates are proposed, together with an increase in the annual amount above which capital gains become taxable.
The transfer duty rate on properties above R10 million will increase from 11% to 13%, and measures are proposed to strengthen the estate duty and donations tax.
Tough stance on tax evaders
The Minister said, meanwhile, that National Treasury will continue to act aggressively against the evasion of tax through transfer pricing abuses, misuse of tax treaties and illegal money flows.
He called on tax payers, who still have undisclosed assets abroad, to take advantage of a newly announced grace period.
“With next year’s deadline in mind, additional relief will be offered for a period of six months, from October this year, to allow non-compliant taxpayers to regularise their affairs.
“Though not introduced today, we publish on our website the draft bill on the special voluntary disclosure programme and the rates and threshold bill,” he said. – SAnews.gov.za
