Budget’s tax hikes set to target high earners
Capital gains and marginal income rate could be affected as the finance minister struggles to plug a R28bn shortfall
High-and middle-income taxpayers are likely to bear the brunt of the tax increases Finance Minister Pravin Gordhan will announce in his budget on February 22. Experts are expecting that Gordhan will turn to further increases in the top marginal income tax rate, as well as hiking capital gains tax and estate duty, in his quest to find the extra R28bn of tax revenue he pencilled into his medium-term budget for the 2017-18 tax year. This is to plug the sizeable revenue shortfall which has resulted from lower-than-expected economic growth. The number may be closer to R30bn since growth may again have fallen short of Treasury estimates, says KPMG chief economist Lullu Krugel. Gordhan could bring in as much as R12bn-R15bn if he declines to give any relief for fiscal drag, and if he gives only partial relief, as he did in last year’s budget. Fiscal drag occurs when inflation-linked salary and wage hikes move people into brackets with higher effective tax rates.The proposed sugar tax and a ...
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