BUDGET 2004/05
R4bn in tax relief
19 February 2004
Finance Minister Trevor Manuel had some good news for taxpayers in his 2004/05 Budget, although the R4-billion in personal income tax relief did not match the R13.3-billion he handed out in 2003/04.
Delivering his Budget speech in Cape Town on Wednesday, Manuel said that while income brackets have been adjusted to provide tax relief across the entire income spectrum, 60% of the total R4-billion in relief would go to lower- and middle-income earners.
About 49% of the total will benefit those earning between R60 000 and R150 000 a year, while 30% goes to those earning between R150 000 and R250 000.
Earners at the lowest end of the spectrum get 11% of the relief, while those at the top get 10%.
Manuel also raised the income tax threshold for people under the age of 65 by 7.4%, meaning that those earning R32 222 or less a year would be exempt from paying any tax (the threshold stood previously at R30 000). The tax threshold for
pensioners (aged 65 and over) has been raised to R50 000, or 6% more than the previous level of R47 222.
Economists attributed the lower tax reduction to the fact that the country's corporate profits had been hit by the strength of the rand, resulting in lower corporate tax collection.
The revised revenue estimate for 2003/04 is R300.3-billion, R4.2-billion lower than the original estimate. Revenue projection for 2004/05 is R327-billion.
"Although economic performance is expected to rebound this year, the weak revenue performance obliges us to be more prudent with tax relief," he said. Manuel told Parliament.
In the past decade, the government has granted a total of R72.8-billion in overall tax relief, enabled in large part by significant improvements in the efficiency of collection by the South African Revenue Service. Personal income tax cuts have totalled about R62-billion since 1995.
Help for home buyers
Manuel
also announced an increase in the exemption threshold for transfer duties on homes to R150 000 from 1 March, to help house buyers in the lower end of the market.
To assist home buyers further, stamp duties on mortgage bonds will also be removed from the beginning of March, while the stamp duty on negotiable certificates of deposit will also be cancelled from 1 April, thereby completing the removal of stamp duties on all debt instruments.
Fuel levies up
Motorists, however, were not spared in the Budget, with the general fuel levy on petrol and diesel upped by 10 cents - to R1.11 and 95 cents respectively - with the aim of raising approximately R900-million in additional revenue for 2004/05.
To offset these increases, Manuel increased the diesel fuel rebate to primary producers in mining, agriculture and forestry by 15 cents a litre, also from 7 April this year.
'Sin' taxes increased
Manuel also
punished smokers and drinkers once more, increasing so-called "sin taxes", with increases on alcohol set to add a further R660-million to the state's coffers.
Smokers will now pay 64 cents more for a packet of cigarettes, while drinkers will pay 4.3 cents more per 340ml can of beer. Ciders and alcoholic fruit beverages go up by 3.4 cents a 340ml can.
Tax on fortified wine rises to R2.33 per litre and on natural wine to R1.17 per litre. Duties on spirits will be raised by R1.76 to R14.78 cents per 750 ml bottle.
However, drinkers of traditional beer will not feel the pinch, as there's no change in the tax on traditional beer.
SouthAfrica.info reporter
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