Cape Town - Finance Minister Pravin Gordhan delivered a surprise during Wednesday afternoon’s National Budget presentation in Parliament by not hiking the personal income tax rate. Tax rates for companies and VAT were not increased either.
However, as part of fiscal measures to narrow the budget deficit and stabilise debt growth government proposes to raise an additional R18.1bn in revenue in R2016/17. This will mainly be achieved by upward adjustments to capital gains tax (the effective rate raised from 13.7% to 16.4% for individuals), transfer duty (11% to 13% on property sales above R10m) and increases in excise duties, the general fuel levy (30 cents per litre) and environmental taxes.
Although limited fiscal drag relief of R5.5bn in personal income tax will be given, the government will still raise an additional R7.6bn from individuals. This will be done by partially increasing marginal personal income tax brackets and rebates for inflation.