Budget Speech 2018: 7 key factors that may affect taxes

Budget Speech 2018: 7 key factors that may affect taxes

With Malusi Gigaba in the process of delivering his maiden 2018 Budget Speech, taxpayers will be watching with interest to see just how the new budget will affect their income.

Briefly.co.za takes a look at 7 key factors that may affect taxes in the next year.

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1. Fuel Levy

If the fuel levy is adjusted, the meters on the pumps are changed and money will flow into Treasury. Currently, the fuel levy is set at 315 cents per litre. It is a general tax, not a contribution to the road-related expenses.

2. Personal Income Tax Rates

If this rate is adjusted, the payroll systems of the country calculate this tax every month and it flows into SARS.

"I hope they don’t take the big step that they took last year with the increase to 45%. I think it’s starting to get to a position where they might be killing the goose that lays the golden eggs," said Rob Cooper, a tax expert from Sage.

READ ALSO: Duduzane Zuma: 10 facts support the manhunt for the corrupt businessman

3. VAT

According to economists, a 1% increase in the VAT rate is roughly an extra R20 billion.

"So if they are looking for at least R50 billion and they can’t find it very easily elsewhere, then it arguably points towards a 2% VAT increase, which then is about R40 billion," Cooper said.

A VAT increase will affect lower-income citizens, more than anyone else, and may require an increase in social grants.

4. National Health Insurance

Increasing the standards of the public healthcare system and to increase its outreach into rural areas is a necessity.

5. Medical Tax Credits

One way SARS may do this is by forcing people to move onto public health credits, by reducing or removing private medical aid tax credits. There has been talk for a number of years that this may happen.

6. Employment Tax Incentive

An incentive aimed at encouraging employers to hire young and less experienced work seekers. It reduces an employer's cost of hiring young people through a cost-sharing mechanism with government, while leaving the wage the employee receives unaffected. Results have been mixed, but the ETI has been extended until February 2019.

7. Tax Tables

SARS will adjust the tax tables to accommodate inflation and ultimately higher-income earners will pay more taxes to cover inflation instead of lower-income earners being taxed more.

READ ALSO: Ramaphosa says top government officials will undergo lifestyle audits

How much do you know about how SARS collects tax? Let us know on our Facebook page and we could publish your opinion.

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Source: Briefly.co.za

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