Budget 2017
PERSONAL TAXES: Mercy for middle earners
Tax revenue short of target but Gordhan resists temptation to penalise everyone except those in top bracket
A big disappointment for treasury last year was the R15.2bn shortfall in personal tax, compounded by an R11,3bn shortfall in Vat and R6,5bn in customs revenue. Finance minister Pravin Gordhan said it is not ideal to increase tax rates in a stagnant economy but argues that further redistribution of wealth is part of government’s inclusive growth strategy, and that the fiscus is an effective tool for reducing inequality. Gordhan has tried to limit the effect of tax increases for those who earn between R70,000 and R350,000 annually. They do not escape altogether as the bracket adjustments and rebate levels were increased by 1%. For example, more people will be joining the 26% tax bracket as the base was increased not by inflation — a preferred tactic of National Party ministers such as Barend du Plessis — but by 1%, to R189,881. The increase is expected to raise an extra R12,1bn. The introduction of a new top rate, by contrast, is quite symbolic. An extra R4,4bn will be brought in by t...
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