Budget Speech 2023 Revenue and Tax Proposals

 

Let me now turn to the revenue outlook and tax proposals.

 

Tax revenue collections for 2022/23 are expected to total R1.69 trillion. This exceeds the 2022 Budget estimate by R93.7 billion, and the 2022 MTBPS estimate by R10.3 billion.

 

Over the medium-term, revenue projections are R6 billion higher than the estimates of the 2022 MTBPS.

 

As a result, there are no major tax proposals in this budget.

 

The improvement in revenue is due to higher collection in corporate and personal income taxes, and in customs duties. This partially offset the lower value-added tax estimates.

 

Madam Speaker, our country is reaping the benefits of a more efficient and effective tax administration, that is building trust to increase voluntary compliance and boost revenue collections.

 

Nilesh Solanki from Gauteng was one of nearly 2,000 South Africans that submitted a tip for the 2023 Budget Tips competition. He asked that we consider not increasing tax rates.

 

Nilesh, you will be happy to know that for 2023/24, government will provide tax relief of R13 billion.

 

In addition to the tax measures I have announced to promote investments in renewable energy, the general fuel levy and the Road Accident Fund levy will not be increased this year.

 

To ease the impact of the electricity crisis on food prices, the refund on the Road Accident Fund levy for diesel used in the manufacturing process, such as for generators, will be extended to manufacturers of foodstuffs. This takes effect from 1 April 2023 for two years.

 

The personal income tax brackets will be fully adjusted for inflation, which will increase the tax-free threshold from R91 250 to R95 750.

 

Medical tax credits will also be increased by inflation, to R364 per month for the first two members, and to R246 per month for additional members.

 

The retirement tax tables for lump sums withdrawn before retirement, and for lump sums withdrawn at retirement, will be adjusted upwards by 10 per cent. This means that the tax-free amount that can be withdrawn at retirement increases to R550 000.

 

The brackets of the transfer duty table will also be increased by 10 per cent, allowing properties below R1.1 million to avoid any transfer duty payments.

 

The research and development tax incentive will be extended for 10 years, and will be refined to make it simpler and more effective.

 

The urban development zone tax incentive will also be extended, by two years, to allow for the review of the incentive to be completed.

 

After further consultations, government intends to publish revised draft legislation on the ‘two-pot’ retirement system. This will include details on the amount that could be immediately available when the system is implemented from 1 March 2024.

 

Any withdrawals from the accessible “savings pot” would be taxed as income in the year of withdrawal.

 

After a review and consultation last year, and taking into account the impact of the Upstream Petroleum Resources Development Bill, the minimum royalty rate for oil and gas companies will be increased to 2 per cent. The maximum rate of 5 per cent remains unchanged.

 

Due to the difficult operating environment for the sugar industry from the impact of flooding and social unrest, the health promotion levy will remain unchanged for the following two fiscal years, to enable the industry to diversify or restructure.

 

Government proposes an increase in the excise duties on alcohol and tobacco of 4.9 per cent, in line with expected inflation. This means that the duty on:

 

 

On illicit trade, over the past three years, SARS has taken several steps to enhance its effectiveness in combating illicit trade, particularly in tobacco.

 

To this end, SARS has completed 2 316 seizures of cigarettes & tobacco products to the value of R598.8 million.

 

An additional R18 billion worth of schedules and assessments have been raised, targeting syndicated tobacco-related crimes.

 

Furthermore, SARS has collected more than R1.2 billion in revenue and handed over 92 cases for criminal proceedings with the NPA of which 2 resulted in successful convictions relating to tobacco smuggling syndicates.