Finance Minister Enoch Godongwana delivered his maiden budget speech earlier today. He says tax collections since the time of the MTBPS have been much stronger than expected.
He says they now estimate tax revenue for 2021/22 to be R1.55 trillion. This is R62 billion higher than our estimates from four months ago, and R182 billion higher than estimates from last year’s Budget.
This positive surprise has come mainly from the mining sector due to higher commodity prices.
Godongwana will use government’s R180 billion tax windfall to reduce borrowing and lower the budget deficit. The overrun also boosts provincial health and education and pays for the R350 grant.
Here are some other highlights on the tax front:
- The personal income tax brackets and rebates will be adjusted by 4.5 percent, in line with inflation. The adjustments will mean that the annual tax-free threshold for a person under the age of 65, will increase from R87 300 to R91 250.
- Medical tax credits will increase from R332 to R347 per month for the first two members, and from R224 to R234 per month for additional members.
- The employment tax incentive will be expanded through a 50 per cent increase in the maximum monthly value to R1 500.
- To provide some relief to households, no increases will be made to the general fuel levy on petrol and diesel for 2022/23. This will provide tax relief of R3.5 billion to South
Africans. There will also be no increase in the Road Accident Fund levy.
- As announced in the 2021 Budget, the corporate income tax rate will be reduced from 28 per cent to 27 per cent, for companies with years of assessment ending on or after
31 March 2023.
- Excise duties on alcohol and tobacco will increase by between 4.5 and 6.5 percent. The increases mean that as from today:
- A 340ml can of beer or cider will cost 11c more;
- A 750ml bottle of wine will be 17c more expensive;
- A bottle of sparkling wine will cost an additional 76c;
- And a bottle of spirits will be R4.83 more expensive;
- A packet of cigarettes will cost an additional R1.03;
- 25 grams of piped tobacco will cost an extra 37c; and
- A 23 gram cigar will be R6.77 more expensive.
- Government also proposes to introduce a new tax on vaping products of at least R2.90 per millilitre from 1 January 2023.
- After three years of no changes, the health promotion levy will be increased to 2.31 cents per gram of sugar.
- The carbon tax rate will increase from R134 to R144, effective from 1 January 2022. As required by legislation, the carbon fuel levy will increase by 1c to 9c per litre for
petrol, and 10c per litre for diesel, from 6 April 2022.
The department of social development will receive the largest allocation of R58.6 billion over the medium term for the following:
- First, to initiate a new extended child support grant for double orphans. This is to encourage the care of orphans within families rather than foster care
- Second, to provide for inflationary increases to permanent social grants.
- For the 2022/23 fiscal year, the old age, war veterans, disability and care dependency grants, will increase by R90 in April and a further R10 in October.
- The foster care and child support grants will increase by a once off R20 in April;
- Thirdly, R44 billion is allocated for a 12-month extension of the R350 social relief of distress (SRD) grant.
Read the full budget speech here: http://www.treasury.gov.za/documents/national%20budget/2022/speech/speech.pdf