Budget 2017: Those who earn more pay more

Budget 2017: Those who earn more pay more

Finance Minister Pravin Gordhan has announced tax proposals for the 2017/2018 financial year. 

File photo

Gordhan is delivering his 2017 budget speech in Parliament.

According to Gordhan, revenue lagged behind the economy this year, leading to a R28 billion shortfall by comparison with the budget estimate a year ago. 

"The revenue shortfall is mainly in personal income tax, value added tax and customs duties. This reflects slower growth in wages, employment and bonus pay-outs last year, amongst other factors," says Gordhan.

The Medium Term Budget Policy Statement indicated that we would raise an additional R28 billion in tax revenues. 

Gordhan says we also need to reduce spending by a total of R26 billion over the next two years.

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"Our current expectation is that total tax revenue for 2016/17 will be R1.144 trillion, which is an increase of 7 percent on the previous year. 

The main tax proposals are:

- A new top personal income tax rate of 45 percent for those with taxable incomes above R1.5 million.

- An increase in the dividend withholding tax rate from 15 percent to 20 per cent.

- Limited bracket creep relief, increasing the tax free threshold from R75 000 to R75 750.

- An increase of 30c/litre in the general fuel levy and 9c/litre in the road accident fund levy.

- Increases in the excise duties for alcohol and tobacco, of between 6 percent and 10 percent. 

Gordhan says further consultations are currently taking place on the tax on sugary beverages. 

"Arising from these discussions, and working closely with the Department of Health, the proposed design has been revised to include both intrinsic and added sugars. The tax will be implemented later this year once details are finalised and the legislation is passed," says Gordhan.

The proposed carbon tax and its date of implementation will be considered further in Parliament this year.

South African Budget 2017 infographic

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