Budget Speech 20217. Tax Policy Changes |
We must advise this House that we now expect to collect R1.21 trillion in taxes during 2020/21, which is about R213 billion less than our 2020 Budget expectations. This is the largest tax shortfall on record.
In 2021/22 government expects to collect R1.37 trillion, provided our underlying assumptions on the performance of the economy and tax base hold. I would like to take this opportunity to thank those South Africans who diligently continue to pay their taxes.
In this Budget we make the following tax policy proposals.
| 1. | The corporate income tax rate will be lowered to 27 per cent for companies with years of assessment commencing on or after 1 April 2022. This will be done alongside a broadening of the corporate income tax base by limiting interest deductions and assessed losses. We will give consideration to further rate decreases to make our tax system more attractive. We will do this in a revenue‐neutral manner. We also intend to leverage the insights of the Davis Tax Committee as we undertake this reform. |
| 2. | The personal income tax brackets will be increased by 5 per cent, which is more than inflation. This will provide R2.2 billion in tax relief. Most of that relief will reduce the tax burden on the lower and middle‐income households. This means that if you are earning above the new tax‐free threshold of R87 300, you will have at least an extra R756 in your pocket after 1 March 2021. |
| 3. | Fuel levies will be increased by 27 cents per litre, comprising 15 cents per litre for the general fuel levy, 11 cents per litre for the Road Accident Fund levy and 1 cent per litre for the carbon fuel levy. |
| 4. | An 8 per cent increase in the excise duties on alcohol and tobacco products. |
From today:
| a. | a 340ml can of beer or cider will cost an extra 14c |
| b. | a 750ml bottle of wine will cost an extra 26c |
| c. | a 750ml bottle of sparkling wine an extra 86c |
| d. | a bottle of 750 ml spirits, including whisky, gin or vodka, will increase by R5.50 |
| e. | a packet of 20 cigarettes will be an extra R1.39c |
| f. | 25 grams of piped tobacco will cost an extra 47c |
| g. | And a 23 gram cigar will be R7.71 more expensive |
t is clear that excessive alcohol consumption can lead to negative social and health outcomes. Consumers do react to price increases, and higher prices should lead to lower consumption of alcohol products with positive spinoffs.
SARS has started to deepen its technology, data and machine learning capability. It is also expanding specialised audit and investigative skills in the tax and customs areas to renew its focus on the abuse of transfer pricing, tax base erosion and tax crime.
In this coming fiscal year, SARS will establish a dedicated unit to improve compliance of individuals with wealth and complex financial arrangements. This first group of taxpayers have been identified and will receive communication during April 2021. In support of these efforts, we request that this House approve an additional spending allocation to SARS of R3 billion over the medium term.