Upping income tax and fuel levies the best route – Nene

FINANCE Minister Nhlanhla Nene has defended the 1 percentage point increase in income tax, saying this would affect the majority of South Africans “minimally”.

In his maiden Budget speech on Wednesday, Nene said South Africans would see increases in taxes on personal income and also announced a rise in fuel levies. He said increases in electricity tariffs were to raise revenue.

The total fuel levy will be increased by 80.5c a litre as from April 1, while personal income tax will go up by 1 percentage point for all salaries above R181 900 a year.

Briefing the select committees on finance and appropriations, and the standing committees on finance and appropriations yesterday, Nene said it was a well-considered move by the Treasury.

“I would like to assure members that the choice we made is a very well-considered choice. I know it affects some of us very minimally. We all are very comfortable with 1 percentage point, mitigated by a number of counter-cyclical measures that we put in. It would be good, while we also represent our own interests, but to represent the interests of a majority of South Africans,” Nene told the committee, comprising National Assembly and National Council of Provinces members.

The Freedom Front Plus’s Wouter Wessels had asked Nene whether raising VAT would not have been a better option.

“An increase in VAT would have extended our revenue much more than the personal income tax would and obviously also grow the economy because we know that economic growth is dependent on spending money,” Wessels said.

DA MP Alan Macloughlin said: “The man in the street has to work harder because the guys at Eskom and SAA can’t do their jobs.”