BUDGET 2003
Tax relief for low-income earners
Matome Sebelebele
26 February 2003
Lower and middle-income households, as well as pensioners, will benefit from Finance Minister Trevor Manuel’s announcement on Wednesday that personal income tax will be cut by R13.3-billion.
The proposed cuts will see primary rebates rise to R5 400, meaning taxpayers under the age of 65 years and earning less than R30 000 a year will not pay any tax.
Delivering his Budget speech in Parliament, Cape Town, Manuel said the cuts were adjusted to provide relief across the entire income spectrum, adding that the threshold for people older than 65 will jump to R47 222 a year.
This will mean that a person under 65 earning R60 000 a year will pay R5 400 tax a year in 2003/2004, compared to R7 340 in 2002/2003.
A taxpayer earning R120 000 a year will save R4 640, while someone earning an annual salary of R1-million will pay R6 240 less.
The interest and dividend income exemption will go up from R6 000 to R10 000 a year
for persons under 65, and from R10 000 to R15 000 for those aged 65 and older.
Pensioners and South Africans receiving retirement funds also got a shot in the arm with the reduction of the retirement fund tax from 25% to 18%, effective from next month.
Manuel also increased air passenger departure tax by R5 to R55 per passenger departing to neighbouring Botswana, Lesotho, Namibia and Swaziland, while those departing for other international destinations will pay an additional R10, increasing the tax to R100 effective from July.
He said the tax, which has not been adjusted for inflation since its inception two years ago, would generate around R30-million for the country.
Meanwhile, the general fuel levy will increase by three cents a litre for leaded petrol and by between 6.2 and 9.2 cents a litre for unleaded fuel, while the levy for diesel will rise by four cents. The Road Accident Fund levy will go up by three cents a litre.
Source: BuaNews
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