Good news for taxpayers as the brackets have been adjusted lower for inflation

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Good news for taxpayers as the brackets have been adjusted lower for inflation

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Bruce Whitfield interviews tax specialist Charles De Wet, ENSAfrica Tax Executive after the 2023 Budget speech.

© anafox/123rf.com

The 2023 budget, announced on Wednesday, includes tax cuts of R13 billion.

With expected tax revenue collections for 2022/23 exceeding projections, Minister Godongwana said, there are no major tax proposals in the budget.

Collections for 2022/23 are expected to total R1.69 trillion. This exceeds the 2022 budget forecast by R93.7 billion and the 2022 MTBPS forecast by R10.3 billion.

tax-income-2023-2024jpg

Income tax rates have not been increased, but instead have been adjusted lower for inflation.

The tax-free threshold increases from R91 250 to R95 750.

In addition to the announced tax measures to encourage investment in renewable energy, the general tax on fuels and the road accident fund tax will not be increased this year.

View the summary of Gondongwana’s tax announcements:

• The Government is proposing tax relief totaling R13 billion in 2023/24 to support the clean energy transition, increase electricity supply and limit the impact of persistently high fuel prices.

• R4 billion in relief is provided for individuals who install solar panels and R5 billion for companies through the extension of the Renewable Energy Tax Incentive.

• Inflation-related adjustments to the personal income tax tables, retirement tax tables and transfer charges have been provided.

• Excise duties on alcohol and tobacco will increase in line with expected inflation of 4.9 percent. The rate for sparkling wine is fixed at 3.2 times that of natural unfortified wine.

• As in Budget 2022, the Government is again proposing no changes to the General Fuel Levy or the Road Accident Fund Levy.

• To limit the impact of the energy crisis on food prices, the refund of diesel fuel duty will be extended for food producers for a period of 2 years, from 1 April 2023 to 31 March 2025.

Bruce Whitfield asks Charles de Wet, Tax Executive at ENSAfrica, about fiscal drag adjustment, where inflation or income growth moves taxpayers into higher tax brackets.

That “fiscal drag” number was about R15.6 billion at the end of the day… I think they were a bit disingenuous about that because they said the inflation rate was 4.9%, whereas you and I know it’s within 6.9%…

Charles de Wet, Tax Executive – ENSAfrica

… and I see Stats SA said it was core rate of inflation so excludes fuel, energy…

Charles de Wet, Tax Executive – ENSAfrica

With your solar panels and bracket creep adjustments you could pay R25 000 less in tax next year…

Charles de Wet, Tax Executive – ENSAfrica

While there is no increase in the overall fuel tax, businesses in particular are spending more on fuel to keep generators running amid the electricity crisis, Whitfield noted.

I think [the relief] is a bit less than it should be… If you are a food manufacturer you can already get a diesel rebate, but not if you are a retailer, so there will be some definitional issues.

Charles de Wet, Tax Executive – ENSAfrica

See the list of “sin tax” increases below:

Graphic showing sin tax increases in Budget 2023. Graphic: Abigail Javier/Eyewitness News
Graphic showing sin tax increases in Budget 2023. Graphic: Abigail Javier/Eyewitness News

Click here to access the full 2023 Budget Speech.

Scroll up to hear the interview (skip to 4:25 for personal tax measures)

This article first appeared on CapeTalk: Budget 2023: Good news for taxpayers as brackets adjusted lower for inflation

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