South Africans who earn more than R1.5 million a year will form part of a new tax bracket who will add an addition R16.5 billion to the fiscus, finance minister Pravin Gordhan announced.<\/p>\n
The new bracket will be taxed at 45%, on top of limited bracket-creep relief for existing tax brackets.<\/p>\n
Together this is expected to raise and additional R16.5 billion in tax revenue, which will cover a large bulk of the R28 billion shortfall. The other R11.5 billion will come form other sources, Gordhan said.<\/p>\n
These other sources include:<\/p>\n
The latter two taxes are expected to raise R5.1 billion, Gordhan said.<\/p>\n
As predicted by many economists, there are no adjustments being made to VAT, though a revised carbon tax will be published for public consideration by the middle of the year.<\/p>\n
The total 2017\/18 budget was proposed to be around R1.56 trillion, of which tax revenues cover R1.41 trillion. The balance will be borrowed, Gordhan said.<\/p>\n
Government debt currently stands at R2.2-trillion, or 50.7% of GDP, with interest payment set to rise to R169-billion in 2017\/18.<\/p>\n
Notably, tax revenues have fallen at a far higher rate than previously projected. According to Gordhan, Treasury has reduced its tax-revenue estimate to R1.144-trillion for 2016\/17,\u00a0down from R1.175-trillion previously.<\/p>\n
This has been described as the largest tax revenue shortfall relative to estimates since the 2009\/10 recession.<\/p>\n
Projections also\u00a0fell short in three of the four main tax instruments relative to the 2016 Budget estimates:<\/p>\n
Treasury estimated that the economy expanded by 0.5% in 2016 and forecast that it would grow by 1.3% in 2017 and 2% in 2018.<\/p>\n