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In a nutshell, here are the main points of Budget 2015:
- South Africans will pay 80.5c more for every litre of fuel purchased. This increases the State’s slice to R4.13 per litre of petrol from the current R3.30 – or from 28% to 41%.
- Income tax rates are raised by one percentage point for those earning more than R15 100 per month. This will raise R9.4bn, offsetting the annual benefit through an adjustment for fiscal drag and medical credits.
- The net effect of the new income rates is that those earning less than R37 500 a month (R450 000pa) will pay less tax with those above this level paying more.
- Micro enterprises and SMEs generally will benefit from significant tax reduction. The 1% annual turnover tax threshold has been doubled from R150 000 to R300 000. The taxes are halved on up to R1m in turnover.
- “Sin” taxes have been hiked with smokers contributing an extra R600m and alcohol drinkers R1.2bn in the year ahead. the tax on a quart of beer goes up by 15.5c, a bottle of wine will cost 15c more, a bottle of sparkling wine goes up by 48c, a bottle of whisky will be R3.77 more; a pack of 20 cigarettes goes up by 82 cents.
- The electricity levy has been increased from 3.5c/kWh to 5.5c/kWh, to assist in demand management. This additional 2c/kWh will be withdrawn when the electricity shortage is over and/or when the proposed Carbon Tax kicks in during 2016.
- Property transfer duties have been increased with a new rate of 11% (previously 8%) introduced for transactions over R2.25m. The tax free hurdle rate has been raised from R600 000 to R750 000.
- SA’s economic growth forecast for 2015 has been reduced to 2% from 2.5% projected during the Mini Budget in October. Growth is expected to rise to 3% by 2017.
- In this 2015/16 Budget, a consolidated Budget Deficit of 3.9% of GDP is projected, falling to 2.5% in 2017/18.
- Government spending is projected to rise at 2.1% a year until 2018. State salaries will take a steady 40% of the Budget; repayments on Government debt will rise from R115bn this year to R153bn in 2017/18.
- Government debt to GDP ratio is now expected to stabilise at 44% in three years’ time. Three years ago a ceiling of 38% had been projected.
- Social assistance beneficiaries numbered 16.4 million in December 2014; the growth in numbers require that an additional R7.1 billion will be spent on Social Development this year. At least 60% of the State’s on interest income will go towards social services and alleviating poverty.
- With effect from 1 April the old age, war veterans, disability and care dependency grants will increase by R60 a month to R1 410; child support grants increase to R330; foster care grants increase by R30 to R860.
- Central Government will make a contribution to Gauteng’s eTolls, which translates into a reduction for motorists. But the user pay principle will continue to be the biggest funder of the road system.
- The current projection is that tax revenue will amount to R979 billion in 2014/15, or about R14.7 billion less than the budget estimate a year ago. Budget revenue will be R1 091 billion this year, or about 8.2 per cent more than in 2013/14.