South Africans rejoiced on Wednesday as finance minister Tito Mboweni made the first of his many announcements in the 2020 budget speech: “No major tax increases.”
He also addressed the rumours that VAT would be going up, stating that he had no idea where people “got that from”.
“To support growth, we propose no major tax increases. Indeed, there is some real personal income tax relief,” said the minister.
“This budget means that a teacher who earns on average R460,000 a year will see their taxes reduced by nearly R3,400 a year. Hard-working taxpayers, who earn on average R265,000 a year, will see their income tax reduced by over R1,500 a year,” explained Mboweni.
He added that he believed that these adjustments reflected our progressive income tax system.
Under the adjustments, someone earning R10,000 a month will pay 10% less in tax. Someone earning R100,000 a month will pay about 1.5% less.
“We are also proposing broadening the corporate income tax base. This additional revenue will be used to reduce the corporate tax rate in the near future to help our businesses grow.
“Start-ups will ignite the economy. The tax system supports them in a number of ways, including the preferential small business tax regime, the VAT registration threshold and the turnover tax. We will review these to improve their effectiveness while at the same time reducing the scope for fraud and abuse.”
Another adjustment in support of the property market is the change in threshold for transfer duties. As a result, property costing R1 million or less will no longer be subject to transfer duty.
“There will be a renewed focus on illicit and criminal activity, including non‑compliance by some religious public benefit organisations. Religious bodies must operate within the strict boundaries of the law if they are to enjoy tax-exempt status. The annual tax-free savings account contribution limit rises to R36,000.”
South Africans immediately took to social media to share their relief at this policy implementation.
VAT WILL REMAIN THE SAME???? #BudgetSpeech2020
— B.k❄ (@bmotlatsi7) February 26, 2020
— Nyams (@Nyamsta_) February 26, 2020
Income Tax reduced! ???????????????? #BudgetSpeech2020
— X M A N (@XmanMnisi) February 26, 2020
— IG:Joy-Zelda (@joy_zelda) February 26, 2020
The budget speech is currently still underway.
WATCH: Budget Speech 2020
(Compiled by Kaunda Selisho)