#Budget2019 | Tax changes highlighted: little tax relief

Treasury sets out plans to render on to Caesar what belongs to Caesar.


Revenue collection remains a bugbear for government due to weak economic growth and tax administration concerns, which were self-inflicted, South Africa’s Finance Minister Tito Mboweni told journalist in a Budget press conference.

The revised tax revenue estimate for 2018/19 is R15.4 billion lower than anticipated by the 2018 Medium Term Budget Policy Statement (MTBPS) estimate. Thus the projected revenue shortfall of R27.4 billion is now R42.8 billion compared with the 2018 Budget estimate.

This sombre news was revealed by Mboweni in his maiden Budget on Wednesday. To address this shortfall, tax changes designed to raise R15 billion in additional tax revenue in 2019/20 have been introduced.

These among others include:

  • Increasing the tax-free threshold for personal income taxes from R78 150 to R79 000. No changes will be made to personal income tax brackets. 
  • Increasing the fuel levy by 29c/litre, consisting of a 15c/litre increase in the general fuel levy, a 5c/litre increase in the Road Accident Fund (RAF) levy and the introduction of a carbon tax on fuel of 9c/litre. 
  • Increasing excise duties on alcohol and tobacco products by between 7.4 per cent and 9 per cent. The targeted excise tax burden for wine, beer and spirits is 11 per cent, 23 per cent and 36 per cent respectively.
  • No change in the monthly medical tax credit for medical scheme contributions.
  • Increase in health promotion levy from 1 April from 2.1c to 2.21c per gram in excess of 4 grams of sugar per 100ml.
  • Limiting the RAF levy diesel refund for primary production industries to ensure that diesel users in these sectors equitably contribute towards their RAF indemnity.
  • The implementation of carbon tax on 1 June 2019.
  • Government proposes to align the tax treatment on ad valorem excise duty on motor vehicles Because of the way ad valorem excise duty is calculated, vehicles produced locally are taxed at a higher rate than imported vehicles.
  • Government intends to publish draft legislation for public comment during 2019 on a gambling tax.
  • Urban development zone tax incentive to be reviewed.
  • South Africa reviewing its oil and gas tax regimes in 2019.
  • Taxing electronic cigarettes and tobacco heating products.
  • Definition of fuel levy goods for tax purposes to be reviewed may include mineral ethanol, illuminating paraffin, aviation kerosene, liquefied petroleum gas, compressed natural gas – as well as biofuels such as bioethanol and biogas
  • Tax on “single-use” plastics including straws, caps, beverage cups and lids, and containers to curb their use and encourage recycling will be considered.

READ MORE : IN FULL | #Budget2019: Tito Mboweni’s maiden speech

Although few, government has also introduced a number of tax incentives. These include:

  • From 1 March 2019, employers participating in the Employment tax incentive will be able to claim the maximum value of R1 000 per month for employees earning up to R4 500 monthly, up from R4 000 previously. The incentive value will taper to zero at the maximum monthly income of R6 500. 
  • From 1 April 2019, the list of items for zero-rating for VAT will include white bread flour, cake flour and sanitary pads. 
  • Energy-efficiency savings tax incentive to be extended to 31 December 2022. During 2019, government will review the design and administration of the incentive to improve its ease of use, effectiveness and economic impact. 

Treasury has also recognised that to render on to Caesar, what belongs to Caesar it needs to restore the efficiency of SARS. To do this it plans to:

  • Appoint a new SARS Commissioner in the coming weeks.
  • It has established a new Illicit Economy Unit to fight trade in the illicit economy. 
  • Officially launch the Large business Unit in early April 2019. 
  • Strengthen SARS IT team & systems.
  • Establish information sharing agreements with allies to help fight cross-border tax evasion schemes.
  • Set up an inspector-general for tax administration.
  • Through internal processes, SARS will implement recommendations concerning inappropriate actions, fruitless and wasteful expenditure, unfair labour practices and maladministration. 
  • SARS will review contracts that breached public procurement regulations and will act to recover funds spent. 
  • SARS is normalising refund payments.

Related Content

THE WEEKEND READ: Analysis– a budget long on words but short on detail.

Approaching the IMF and World Bank for assistance will rankle many within the ruling African National Congress (ANC) and its alliance partners. Mr Mboweni found himself in the cross hairs in April when ANC Secretary General Ace Magashule and his alliance counterparts called on President Cyril Ramaphosa to reject an approach to the IMF or World Bank for assistance in the fight against Covid-19 following comments by the finance minister.

Tax Ombud release findings of second systemic investigation against SARS

This week the South African Revenue Service tolled of the full extent of its problems by revealing a shortfall of almost R300 billion leaving the government with less money to spend at a time it’s most needed. And yet the people who pay this dwindling amount of tax are often disputing this every step of the way. How often and how serious are these dispute. Tax Ombud Professor Thabo Legwaila, CEO of the Tax Ombud joins CNBC Africa for more.

Is SA ready to deal with a looming sovereign debt crisis?

A day after Finance minister Tito Mboweni delivered his crucial supplementary budget speech, the markets are down, the rand dollar exchange is taking a hit and the economy looks bleak at best. So where to now? Arthur Kamp, Chief Economist at Sanlam Investments joins CNBC Africa for more.

#SpecialBudget2020: Economists react to Mboweni’s supplementary budget

Joining CNBC Africa to discuss a post-budget analysis of the emergency budget speech yesterday is Azar Jammine, Director and Chief Economist at Econometrix and Maarten Ackerman, Chief Economist and Advisory Partner at Citadel.

Subscribe to our newsletter

Sign up for free newsletters and get more CNBC AFRICA delivered to your inbox

More from CNBC Africa

Uganda Securities Exchange CEO on how COVID-19 is impacting the bourse

The economic turmoil caused by the COVID-19 pandemic has had wide severe impact on financial markets not leaving behind stocks, bond and commodity markets. Uganda Securities Exchange CEO, Paul Bwiso joins CNBC Africa for more.

COVID-19: How the pandemic is accelerating the digitalization of healthcare

The COVID-19 pandemic has caused huge disruptions in healthcare provision, highlighting the need to adopt and invest in digitalization. Dr. Wanjeri Millicent Loice, Director and Content Manager, Toto Health Kenya joins CNBC Africa for more.

AfDB’s Nnenna Nwabufo on how COVID-19 has impacted African economies

According to the African Development Bank’s revised African Economic Outlook, though the continent is expected to rebound next year; it could lose a quarter of a trillion dollars in economic output for the rest of this year and 2021. Nnenna Nwabufo, Acting Director-General of East Africa Regional Office at the AfDB joins CNBC Africa for more.

Kenyan sports minister Amina Mohamed to bid for top WTO job

The Geneva-based body is seeking a replacement for Brazil’s Roberto Azevedo who is stepping down a year early at the end of August at a critical juncture for the trade watchdog.

Partner Content

Maktech’s Godwin Makyao: Now Is A Time of Entrepreneurial Opportunity in East Africa

As an executive decision-maker in both the telecommunications and tourism industries, Godwin Makyao could not have experienced a more diverse set of...

Sanlam launches urgent job-preservation initiative in response to COVID-19

Sanlam Investments is responding to the COVID-19 pandemic through large-scale support of the recovery of South African companies, from small enterprises to...

Trending Now

Steinhoff agrees to sell stake in Conforama France to Mobilux

JOHANNESBURG (Reuters) - Scandal-hit Steinhoff International agreed to sell its shares in furniture retailer Conforama France to Mobilux Sàrl, the parent company...

Namibia to ground national carrier’s license over cash hole

WINDHOEK (Reuters) - Cash-strapped Air Namibia will have its planes grounded at midnight on Wednesday after it failed to secure enough funding...

Uganda growth to sink as low as 0.4% this year – World Bank

KAMPALA (Reuters) - Ugandan economic growth is set to plunge to as low as 0.4% in 2020 from 5.6% last year as...

How retirement funds can contribute to rebuilding SA’s economy

Sanlam Benchmark Symposium: Sanlam has conducted research across a wide breadth of employers, retirement funds and professional consultants to benchmark their employee benefits experiences of the lock-down as well as their expectations of the future in a COVID-19 impacted economy. Chris Bishop spoke to Viresh Maharaj, Managing Executive, Sanlam Corporate Distribution, about the outcomes of the research and current trends in the Industry....
- Advertisement -