The personal income tax relief outlined in Finance Minister Pravin Gordhan’s Budget speech is not enough to cover rising inflation, PricewaterhouseCoopers (PwC) said on Wednesday.<\/p>\n
Accountant Christo Paxton said in a statement that while the personal income tax relief of R9.3 billion was welcome, the difference it would make to taxpayers’ pockets was limited.<\/p>\n
About 40 percent of the tax relief went to South Africans earning below R250,000 a year.<\/p>\n
“When comparing an individual’s tax liability who earns about R200,000 per year, the individual will have an additional R106 extra in their pockets every month.<\/p>\n
“This barely covers the ever-rising cost of fuel and consumables.”<\/p>\n
A person earning around R700,000 annually would have an extra R370 in their pockets each month.<\/p>\n
“This is not quite enough to compensate us for the effects of inflation,” Paxton said.<\/p>\n
Gordhan’s budget increased the tax-free, lump-sum amount paid out of retirement funds from R315,000 to R500,000, in favour of lower income members who did not benefit from deductible contributions.<\/p>\n
PwC tax consultant Avisha Gajadhar said this was a generous increase of 58.7 percent.<\/p>\n
“However, the top bracket did not increase substantially in comparison — increasing from R945,000 to R1,015,000.”<\/p>\n
This amounted to a mere 19.6 percent increase.<\/p>\n
“This is clearly in line with the government’s continued efforts to encourage individuals to save for retirement, particularly those in the lower income brackets,” Gajadhar said.<\/p>\n
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