Finance Minister Nhlanhla Nene’s 2015/16 budget contained mixed messages for individual taxpayers, PricewaterhouseCoopers (PwC) said on Wednesday. PwC tax consultant Ian Wilson said in a statement that measures announced in the budget signalled relief for low- to middle-income earners and increased the income tax burden for middle- to high-income earners.
“The usual relief in the form of widened tax brackets and increased personal rebates has been neutralised for taxpayers with annual taxable incomes in excess of R450,000 by an increase in the tax rates by one percent for all brackets other than the lowest, which remains at 18 percent.”
Senior tax manager Karen Botha said that a taxpayer earning around R100,000 per year would have an additional R44.25 extra in their pockets every month, barely covering ever-rising costs of fuel and consumables. However, a taxpayer earning around R1 million a year could expect to have R379.22 less cash to take home each month.
“It is incredible to think that 11 percent of registered taxpayers bring in 61 percent of the total personal income tax payable in South Africa, yet the lower income earners get to take more home on a monthly basis,” Botha said.
“I am not sure for how much longer the 11 percent will tolerate this.”
Medical scheme contribution tax credits were increased marginally to R270 per month for the first two beneficiaries and R181 per month for each additional beneficiary.
Wilson said: “This is a form of tax relief but any benefit needs to be compared with potential increases in fringe benefit taxation on employer contributions to medical schemes.” SAPA