Supplementary Budget 2020

From income tax to green levy, experts weigh in on #Budget2019

shot of word tax reform
shot of word tax reform

Against a backdrop of tough economic times, Finance Minister Tito Mboweni walked a tightrope between appeasing taxpayers and managing the fiscus.

Below, tax experts unpack key aspects of his maiden Budget address.

Personal income tax

The announcement that there would be no increases in income tax rates and that VAT would remain unchanged was welcomed, as government sought to limit the negative effects of tax hikes on an already struggling economy.

"In contrast to what we have become accustomed to over the past few years, there will also be no adjustment to the individual tax tables to take the effects of inflation into account," said Barry Knoetze, Associate Director, PwC Tax.

Despite speculation regarding medical tax credit to taxpayers belonging to medical schemes, Mboweni also made no changes regarding this credit.

Green tax

National Treasury will this year publish a draft Environmental Fiscal Reform Policy paper outlining options for environmental fiscal reforms, the finance minister announced.

Alwina Brand, PwC Tax Partner, welcomed the news, "considering the role of new taxes or incentives to address the promotion of efficient water use, the reduction of waste and the encouragement of improvements in waste management".

Brand added: "Equally, in step with global trends, government will investigate a tax on 'single-use' plastics including straws, caps, beverage cups and lids, and containers to curb their use and encourage recycling."

Investment schemes

Government said it required more time to collaborate with the Collective Investment Schemes Industry to find solutions to the negative impacts of the proposed legislation, Brand noted.

"The cooperation between government and the Fund industry would be welcome news for the investor public, she said.

The Collective Investment Scheme industry provides the public with access to listed instruments, through a participatory interest in the total Collective Investment Scheme portfolio, which normally comprises listed shares, bonds and similar products.

"Public comment to the draft legislation emphasised the negative impact that such a change in tax policy would have on the Fund industry and the South African savings culture at large," she said.

ZAR/USD
17.70
(-0.22)
ZAR/GBP
23.16
(-0.48)
ZAR/EUR
20.83
(-0.08)
ZAR/AUD
12.67
(-0.25)
ZAR/JPY
0.17
(-0.32)
Gold
2034.30
(+0.40)
Silver
28.85
(+2.63)
Platinum
1004.00
(+4.24)
Brent Crude
44.49
(0.00)
Palladium
2304.99
(+5.72)
All Share
56757.73
(-1.56)
Top 40
52435.65
(-1.72)
Financial 15
9897.96
(+0.10)
Industrial 25
74671.49
(-1.98)
Resource 10
58948.78
(-1.89)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 941 votes
It depends on how the funds are used.
74% - 6281 votes
No. We should have gotten the loan elsewhere.
15% - 1293 votes
Vote