South Africans can breathe a sigh of relief as Finance Minister Tito Mboweni announced during today's National Budget to support growth, National Treasury proposes not increasing value added tax, pay-as-you-earn or other personal income taxes.
The Minister explained that this Budget means that a teacher who earns on average R460 000 a year, will see their taxes reduced by nearly R3 400 a year and that tax payers, who earn on average R265 000 a year, will see their income tax reduced by over R1 500 a year.
In addition, it was announced that to support the property market, the threshold for transfer duties is adjusted. Property costing R1 million or less will no longer be subject to transfer duty.
The Minster took a firm stance on Tax increases, which was not predicted but many economic pundits. Government are also proposing broadening the corporate income tax base. The additional revenue will be used to reduce the corporate tax rate in the near future to help businesses grow.
All of these tax reliefs are great for the man on the street who is still under significant financial pressure. Freeing up investors and consumers from considerable tax pressures can certainly translate into improved economic activity.
Many were expecting more details, however, due to its nature, the Budget speech is merely an overview of the coming fiscal year. The Minster provides a holistic perspective and identifies prioritized budget allocations alongside reasoning.
Unfortunately, there is still negative sentiment in the market and economic trends are turbulent, to say the least. Some markets have certainly picked up but for us to ensure sustainable growth Government has to implement and effectively manage the plans announced today. Bailouts and corruption are crippling our economy so if government can eradicate a lot of these actions we will see more consumers react positively and investment activity increase.
CEO Harcourts South Africa