Budget: Relief for taxpayers, but...

2011-02-23 13:08

Individual taxpayers will be overjoyed by the R8.1-billion tax relief that Finance Minister Pravin Gordhan announced in his Budget Speech.

The relief comes from adjusting the tax brackets of individual taxpayers.

However, the excitement will be dampened by the announcement that government was mulling various tax options to fund the national health insurance (NHI) scheme, which the ANC said last year at its general council meeting it could cost taxpayers R376 billion by 2025.

Gordhan said in his budget speech that raising VAT was one of the options put on the table to finance the health scheme, which will cover millions of South Africans.

“There will be substation cost implications. We will consider and consult on options for meeting the funding requirements, including a payroll tax (payable by employers), and increase in the VAT rate and a surcharge on individuals’ taxable income.

“The fiscal and financial implications of the health system reform, and alternative revenue sources will be examined in the year ahead,” said Gordhan.

He also revealed that gamblers were also facing higher tax. “With effect from from April 2012, all winnings above R25 000 including payouts from the National Lottery will be subject to a final 15% withholding tax. This is in line with practice in a number of other countries, such as the US,” Gordhan said.

He said he hoped this would discourage excessive gambling.

Gordhan also revealed that the dividends tax will come to effect in April 2012, replacing the secondary tax on companies. The R8.1-billion tax relief will lessen the impact on inflation on taxpayers, Gordhan said.

 

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