Why the #Budget2019 will create more harm than good for the taxpayer

Why the #Budget2019 will create more harm than good for the taxpayer

- Experts have reacted to the 2019 Budget Speech with skepticism saying, despite no changes in personal income tax, the taxpayer will be carrying a heavier burden

- Annual salary increases will most likely see earners moving to a higher tax-bracket, resulting in an increase in the tax they pay regardless

- Further to this, no move was made to alleviate taxes on goods for both consumers and companies

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Taxpayers in South Africa will be once again feeling the pinch says expert Bernard Sacks in reaction to the recent Budget Speech.

The tax partner at Mazars explains that the most notable of the announcement would be personal income tax tables and brackets remaining unchanged

"This means that the South African public will be confronted with the full force of 'bracket creep', as annual salary increases will likely result in many individuals moving into higher tax brackets and finding themselves being taxed significantly more as a result,"

Mike Teucher, head of taxation at the company, says that none of the tax categories saw any move to alleviate the tax burden on consumers or companies. Added to this, no substantial moves were made to help encourage much needed foreign investment.

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READ ALSO: No increase to income tax rates but sin tax and fuel levy to go up

According to Fin24, Tumisho Grater, an economic strategist for Novare, says that tax policy and spending interventions are needed as far as tax revenue shortfall and expenditure pressures are concerned.

Grater further added that some of the major tax proposals for this financial year included raising the tax-free threshold for personal income tax. This will allow the state to raise a further R12.8 billion by not adjusting the brackets for inflation.

Marc Sevitz, TaxTim's co-founder, weighed in, saying that the lack of adjustment means that, should you receive an increase, you will actually be paying more for tax:

"So, just because inflation went up, doesn't mean SARS lets you off the hook. You will essentially see the most minor increase in take home pay on your payslips each month from 1 March. The only good news here is that there was no tax increase,"

Those who enjoy larger incomes will be taking the brunt of the tax burden, with Sevitz explaining:

"Super earners are still going to be taxed a whopping 45% per every R1 earned above R1 500 000 per year being at least R532 041, no change from prior year. Therefore, the biggest earners still pay the most tax each year,"

Briefly.co.za reported earlier that Finance Minister Tito Mboweni had announced that, while there was no increase in personal tax, fuel levies and sin tax would be put up.

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Source: Briefly.co.za

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