Tax burden eased for battling families
Change in primary rebate increases the tax-free threshold from R79 000 to R83 100 income per annum
FINANCE Minister Tito Mboweni has given relief to struggling taxpayers as billions of rand will be put back into their pockets.
While political parties and civil society welcomed the tax rebates for consumers, they said the Budget fell short in dealing with rising debt and state-owned entities (SOEs).
In his Budget, Mboweni said low income-earning individuals would get the most relief.
Mboweni’s decision for tax relief measures comes at a time when consumers are battling to survive in tough economic conditions.
He said the economy was not performing and there was no need to put pressure on consumers.
In the Budget review, the National Treasury stated that all categories of taxpayers would benefit from the tax relief.
“The personal income tax brackets and the primary, secondary and tertiary rebates will be increased by 5.2% for 2020/21, which is above expected inflation of 4.4%.
“This adjustment provides R2 billion in tax relief. The change in the primary rebate increases the tax-free threshold from R79 000 to R83 100,” stated the review.
Despite the relief for taxpayers, Mboweni reminded the country there will be increases in sin taxes.
“The government will increase most excise duties by an amount that matches expected inflation of 4.4% for 2020/21, and by 6% in the case of sparkling wine and 7.5% for pipe tobacco and cigars,” the Budget review stated.
EFF leader Julius Malema said the party welcomed the establishment of the State Bank and the Sovereign Wealth Fund.
Malema said the tax breaks would
“It was a weak Budget. It provoked workers. That is what it achieved Sizwe Pamla Cosatu Spokesperson
be a relief for low-income earners and that the rich needed to be taxed more.
The IFP’s Inkosi Mzamo Buthelezi said they were concerned about rising debt that is threatening to reach 71% in the next two years.
He said Mboweni also failed to rein-in SOEs, which received more bailouts.
DA spokesperson on finance Geordin Hill-Lewis said they welcomed the tax breaks. “He confounded expectations of further tax increases and, in fact, gave some small income tax relief. This is welcome news, especially for working families who have been struggling to make ends meet.
“More money in citizens’ pockets means that they can spend more, or save more, and both of these are good for growth,” said Hill-Lewis.
Hill-Lewis said they doubted whether Mboweni will be able to cut the public sector wage bill by R160bn because the trade unions have not agreed to it.
Cosatu, meanwhile, warned Mboweni that he had declared war on workers for cutting the public sector wage bill over the next three years, while the South African Federation of Trade Unions (Saftu) said the government had “got it wrong”.
Cosatu spokesperson Sizwe Pamla said: “It was a weak Budget. It provoked workers. That is what it achieved.”
Fedusa slammed the R160 billion cut in the public sector wage bill in the medium term, demanding that the matter be taken to the Public Sector Co-ordinating Bargaining Council.
FINANCE Minister Tito Mboweni announced increases to the social grants paid to more than 18 million beneficiaries in his Budget speech.
Mboweni said the grants reduced inequality and protected the most vulnerable in society.
“I am happy to announce that grants are adjusted as follows: R80 increase for old-age, disability and care dependency grant to R1860 per month.
“An R80 increase in the war veterans grant to R1880,” he said.
“R40 increase for the foster care grant to R1040 per month.
“The child support grant will increase by R20 to R445 per month,” Mboweni added.
National Treasury said R88 billion is allocated towards social security grants, R83.1bn for old-age grants, child support grants R69.8bn and others at R35bn.
It also said measures were in place to root out fraud in the payment of social grants.
The National Treasury’s budget estimate of the national expenditure document said the South African Social
Security Agency planned to roll out a biometric solution to reduce fraud by strengthening beneficiary verification mechanism and authentication.
“Roll-out is to be completed in 2020-21 at a cost of R17.5m,” according to the National Treasury.
However, the Cabinet has approved reductions to the department’s baseline of R4.2bn over the medium-term.
“There is a need for the government to continue to develop and implement programmes to support the poor and vulnerable to establish their own income-generating activities, with a specific focus on women and children.”
The department will spend R398m over the medium-term to employ 200 social workers.
“This allocation previously focused on providing scholarships to social work students and has been shifted from the welfare services policy development and implement support programme to the provincial equitable share”
The department planned to design a welfare package to respond to the increasing number of reported social problems.