Budget Speech, 2013Tax policy |
Mister Speaker, allow me to turn now to the revenue proposals.
We find ourselves in a challenging period, with revenues lower than expected by R16.3 billion compared with estimates at the time of the 2012 budget. This is predominantly due to weak economic growth during the second half of 2012, mining sector disruptions and lower commodity prices. Tax revenues are expected to improve over the medium-term in line with higher economic growth and the stabilization of key commodity prices.
Over the past decade, we have steadily broadened the tax base, both through policy reforms and improved revenue administration. This has made substantial tax relief possible, contributing both to household disposable income and a lower cost of doing business.
The main tax proposals for 2013 are as follows:
| • | Personal income tax relief of R7 billion, together with adjustments to the medical tax credit and other monetary thresholds, amounting to about R350 million. |
| • | Reforms to the tax treatment of contributions to retirement savings. |
| • | An employment incentive through the tax system for first-time job seekers. |
| • | Further tax relief for small businesses, including an increase in the monetary tax thresholds applicable for small business corporations. |
| • | An overall increase of 23 cents per litre in fuel levies in April, which includes 8 cents per litre in the road accident fund levy. |
| • | Increases in excise duties on alcohol and tobacco products of between 5.7 and 10 per cent, and |
| • | Introduction of the carbon tax in 2015, together with the phasing-out of the electricity levy. |
A tax review will be initiated this year to assess our tax policy framework and its role in supporting the objectives of inclusive growth, employment, development and fiscal sustainability, amongst other things.
The Budget Review outlines various measures proposed to protect the tax base and limit the scope for tax leakage and avoidance. The taxation of trusts will come under review to control abuse; modifications are proposed to the tax treatment of employment share schemes and disability or income-protection policies; outstanding difficulties in the distinction between debt and equity will be addressed; and it is proposed that foreign businesses which sell e-books, music and other digital goods and services should be required to register as VAT vendors, in line with regulations which have been adopted by the European Union and other jurisdictions.