How the 2019 Budget Speech affects individual tax payers

There was much hype and anticipation ahead of Finance Minister Tito Mboweni’s budget speech last month. Knowing some of the major challenges the country faces many were interested to see how the Finance Minister would juggle the fiscus to address issues such as the Eskom crisis, rampant corruption and the other issues covered by the media daily.

Being a hotly contested election year the governing party had a fine balancing act to maintain to ensure that issues are addressed but at the same time to not increase taxes too much as citizens are already overburdened and nearing a tipping point.

Let’s look at how the 2019 budget speech affects the ordinary man on the street.

Fuel Levy

As usual, an increase in the Fuel Levy was announced. This is one of “go to” taxes for the government to increase and the real effect to the man on the street is the increased transportation costs of absolutely everything, including themselves. Let’s hope that retailers and service providers don’t exploit the opportunity to increase costs beyond what is needed.

The current fuel levy is R5.34 for every litre of petrol bought and R5.19 for every litre of diesel. This consists of:

• 37 (petrol) and R3.22 (diesel) for the general fuel levy
• 93 for the RAF levy (for petrol and diesel)
• 4c for customs and excise taxes (for petrol and diesel)

The increases announced total 29c for every litre of petrol and 30c for every litre of diesel and include a new Carbon Tax of 9c (petrol) & 10c (diesel). The new Carbon Tax comes into effect on 5 June while the other increases will be seen on 3 April already.

This will bring the total taxes per litre to R5.63 & R5.49 for petrol and diesel respectively which is a 220% increase from the total fuel levies from 2008 which stood at R1.76 (petrol).

Individual Income Tax

The Income Tax brackets and Pay As You Earn (PAYE) tax have remained unchanged while the personal rebates have increased marginally. So marginally that it’s barely worth noting. Medical Aid credits remain unchanged and thus you shouldn’t see much difference in your monthly tax deductions. It’s expected that employees will all receive some form of salary increase in the year and thus pay a little more tax accordingly.

“Sin” Taxes

The so-called “sin” taxes are another easy target to be increased each year and the question is simply by how much. Here are the details:

• The excise duty on a can of beer goes up by 12 cents to R1.74
• A 750ml bottle of wine will have an excise duty of R3.15, which is 22 cents more
• The duty on a 750ml bottle of sparkling wine goes up by 84 cents to R10.16
• The duty on a bottle of whiskey will go up by R4.54 to R65.84
• A pack of 20 cigarettes goes up by R1.14 cents to R16.66
• The excise duty on a typical cigar will go up by about 64 cents to R7.80
• There will be no change to the excise duty on sorghum beer

Social Grants

Although social grants have increased with an inflation linked increase, they remain extremely low. Those who truly need the grants will barely be able to survive as the new monthly allowance for pensioners is a mere R1,780 and for those over the age of 75 it’s R1,800.

This should be a strong motivator for you to ensure that you prepare adequality for retirement!

Other social grants such as foster care and child support have also increased slightly.

To close

The increases have certainly not have been as severe as they could have been and those in the higher income brackets will easily absorb them. It’s hard to know though what may lie ahead for us in next years Budget Speech as the ANC will more than likely remain in power and the billions that have been squandered and stolen from the fiscus will need to be recouped by none other than the honest tax payers.