Budget Speech 2016Tax proposals |
Inclusivity is also an important principle in our tax system, Honourable Speaker.
South Africa has built one of the most effective tax authorities in the developing world. The Revenue Service has made huge strides over the past decade in enforcing the law while providing assistance to small businesses and individuals. Public compliance with tax obligations is high. I am deeply mindful that we have a corresponding obligation, as government, to improve the impact of every rand spent, and to eliminate waste and corruption.
Inclusivity is also about the details of tax design, how it supports or hinders small and growing businesses, how the burden of tax is shared across individuals and households in different circumstances and in different income brackets, and how taxes contribute to environmental and health objectives.
This year, in view of the need to raise additional revenue and reduce the budget deficit, we have paid special attention to the fairness and inclusivity of the tax system.
We have also been mindful of the need to moderate the impact of tax increases on households and firms in the present economic context.
Our tax proposals include the following:
| • | Personal income tax relief of R5.5 billion, which partially compensates for inflation, focused mainly on lower- and middle-income earners; |
| • | An increase in the monthly medical tax credit allowances; |
| • | An increase of 30 cents a litre in the general fuel levy; |
| • | Introduction of a tyre levy to finance recycling programmes, increases in the incandescent globe tax, the plastic bag levy and the motor vehicle emissions tax; |
| • | Introduction of a tax on sugar-sweetened beverages; and |
| • | Increases of between 6 and 8.5 per cent in the duties on alcoholic beverages and tobacco products. |
The Income Tax Act already contains measures to encourage provision of bursaries by employers to employees or their relatives. It is proposed that the income eligibility limits and qualifying bursary values should be increased. Inclusion of industry-based training organisations in the list of activities qualifying for tax-exemption is also under consideration.
Our current taxes on wealth are under review by the Davis Committee. Higher capital gains inclusion rates are proposed, together with an increase in the annual amount above which capital gains become taxable. The transfer duty rate on properties above R10 million will increase from 11 per cent to 13 per cent, and measures are proposed to strengthen the estate duty and donations tax.
We will continue to act aggressively against the evasion of tax through transfer pricing abuses, misuse of tax treaties and illegal money flows. Drawing on the work of the OECD, the G20 joint project on base erosion and profit shifting and independent bodies such as the Tax Justice Network, further measures will be taken to address such revenue losses, including inappropriate use of hybrid debt instruments.
With effect from 2017, international agreements on information sharing will enable tax authorities to act more effectively against illicit flows and abusive practices by multinational corporations and wealthy individuals. Building on the expertise gained by the Large Business Centre since its establishment in 2004, SARS is well placed to take advantage of the new Common Reporting System. Our international collaboration is an essential part of efforts to ensure that the tax system remains robust and contributes to inclusive growth. I will announce further steps in this regard later in the year.
Time is now running out for taxpayers who still have undisclosed assets abroad. With next year’s deadline in mind, additional relief will be offered for a period of six months, from October this year, to allow non-compliant taxpayers to regularise their affairs. Though not introduced today, we publish on our website the draft bill on the special voluntary disclosure programme and the rates and threshold bill.