Supplementary Budget 2020

WATCH: Tax axe falls hard on high income earners

Cape Town – The overall impact of tax on the consumer was a bit negative, but it was also redistributive in nature, said an economist.

"We think the high income earners did bear the brunt of the tax increases," economist at MMI Holdings Sanisha Packirisamy told Fin24 in a video interview.

Finance Minister Pravin Gordhan announced in his Budget Speech government’s decision to institute a top tax bracket whereby individuals who earn more than R1.5m would be taxed at a rate of 45%.

Personal income tax is the largest single contributor to tax revenue at 38.1%, compared to corporate income tax contributing 17.3% and VAT which contributes 24.7%.

Commenting on the uppermost tax bracket, Packirisamy said about R4.5bn in revenue will come in from this stream.

"Overall, the higher income earner was hit harder," she said.

Watch the full interview

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