By Alec Hogg for BizNews
Finance Minister Tito Mboweni delivered his Budget speech this afternoon.
The highlights are as follows:
- No tax increases in the coming fiscal year beyond a modest rise in the fuel levy (25c a litre) and the usual increases in booze and smokes (4.4% to 7.5%). Electronic cigarettes (vapes) will be taxed from 2021.
- There is fractional relief on personal income tax with the R12bn impact of fiscal drag being offered through a R14bn effective drop in inflation-adjusted tax rates. This net benefit of R2bn is to be funded through a carbon tax (R1.75bn) and a plastic bag levy (R250m) which is increased to 25c.
- The annual contribution to tax-free savings accounts has been increased by R3,000 to R36,000 from March 1.
- In a blow for tax planning and a mushrooming sector, Section 12I tax incentive relating to industrial policy projects will not be renewed beyond March 2020.
Loopholes and tax incentives for companies have been targeted in various ways:
- Net interest expenses will be restricted to 30% of earnings after January 2021 in a specific measure to combat tax avoidance by multinationals.
- Sunset clauses are being adopted on incentives dealing with airport and port assets, rolling stock and loans for residential units.
- There will be no extension of tax benefits beyond the six Special Economic Zones already approved.
- More than 18m people now receive social security payments. Their grants will increase by between R20 and R80 per month in the year ahead. A change in the way social security is administered has saved R1bn a year.