As tax hikes loom, here is a look at all the taxes you already pay
Lost track of the confusing array of duties, levies and taxes that come out of South African corporate coffers and individual pockets? Belinda Sussman offers a handy reminder
In his medium-term budget presentation in October, Finance Minister Malusi Gigaba said the deficit in the 2018-19 fiscal year was expected to be R69.3bn.
Add to this the R15bn in increased taxes reportedly required to fund “fee-free” higher education, and the targeted tax increases in the 2018-19 budget, and the deficit sits near the R80bn mark — a staggering number.
It is likely that tax increases are in store, which will be announced in the upcoming budget.
A tactic Treasury has used in recent years has been to introduce a raft of new taxes, which often go unnoticed by those footing the bill.
It is interesting to sit back and reflect on the individual impact of the vast array of taxes and levies that are currently applicable, and those that will soon be applicable in SA.
• Individuals are subject to personal income tax (with a maximum marginal tax rate of 45%) on taxable income;
• Companies are subject to corporate income tax of 28% on taxable income;
• Most supplies made are subject to value-added tax (VAT) at 14%;
• Capital gains tax is levied on all capital gains made, at a maximum effective rate of 22.4%;
• Dividends declared by a company are subject to dividends withholding tax of 20%;
• A skills development levy of 1% of the total amount paid in salaries to employees is paid by all employers to the South African Revenue Service (SARS);
• Employers pay unemployment insurance fund contributions of 2% of the remuneration paid by the employer to the employee — 1% contributed by the employee and 1% contributed by the employer. The amount of the 1% contribution due is capped at a maximum of R148.72 a month;
• The mineral and petroleum resources royalty is triggered on the transfer of a mineral resource extracted from within SA and it is levied at a rate between 0.5% and 7% on the value of the mineral resource transferred;
• A diamond export levy is payable on unpolished diamonds exported from SA at a rate of 5% of the value;
• Estate duty of 20% is payable on the value of an estate at the time of a person’s death;
• Donations tax of 20% is payable on the value of donations made;
• Property transfer duty is a tax payable by buyers of all types of properties (with a maximum marginal tax rate of 13%) on the value of the property;
• Securities transfer tax is levied on the transfer of any shares, at a rate of 0.25% of the value;
• Customs and excise, and in some instances ad valorem excise duties, are levied. The person on the street may not be aware that excise duties alone on certain products account for a large portion of the retail price. For example, the targeted excise tax burden (including the so-called “sin” taxes) on wine, beer and spirits are 11%, 23% and 36% of the weighted average retail price, respectively. On tobacco products, the targeted excise tax burden is currently 40%;
• A fuel levy is included in the fuel price. Currently the general fuel levy is R3.15 a litre and the Road Accident Fund levy is R1.63 a litre. Together these levies total R4.78, which makes up roughly 33% of the total fuel cost;
• Tolls are payable for driving on certain roads;
• Numerous environmental levies are paid: plastic bags levy, electricity generation levy, electric filament lamp levy (ie a levy on non-energy-saving light bulbs), a motor vehicle carbon dioxide emission levy, and a tyre levy;
• A second draft of the Carbon Tax Bill was released in December 2017, and carbon tax will become a reality in the future;
• A new tax on sugary beverages has recently been brought into law, and will be paid by beverage manufacturers from April 1 2018. This will raise the price of a can of cola, for example, by about 11%;
• In the 2014 budget, an acid mine drainage tax was announced, and the 2012 budget proposed a gambling tax. Both of these proposed taxes were again mentioned in the 2017 budget, which one can view as an indication that the taxes will be implemented in future.
It is evident that the South African tax base is subject to a wide variety of taxes already, which when looked at as a whole, place the tax base under significant pressure.
On the eve of this year’s budget speech, all stakeholders await the inevitable tax increases and possible new tax announcements with much trepidation.
• Sussman is a tax consultant at Norton Rose Fulbright.