A better budget than many had feared

Tito the taxer

by John Fraser

Given the deep decline of the economy even before the Covid pandemic clobbered South Africa, it would have been deeply damaging if the Finance Minister Tito Mboweni had implemented the R40bn in tax increases he threatened in in his mini-budget towards the end of last year.

As it was, he announced in his 2021 budget that he would not raise any additional tax revenue in this budget, beyond the usual inflationary – and oft above-inflationary – annual increases.

The personal income tax brackets and rebates will increase above the inflation rate of 4 per cent, excise duties on alcohol and tobacco will jump by 8 per cent, and fuel taxes will see increases around the inflation rate.

Over the medium term, R9 billion is allocated for Covid vaccine rollout, which seems way below earlier estimates of up to R20bn.   Possibly the private sector is going to chip in more than we had thought?

In terms of industrial support, the highly successful Section 12J incentive for venture capital to end as had been scheduled this year.

Pleas for an extension were ignored.

In general, the budget speaks of a determination to dim the focus on industrial support through incentives, opting instead to reduce corporate tax, which will happen from next year.  SA’s corporate tax rates do not compare favourably with those of our rivals.

But at least there is no wealth tax, no really horrid surprises and an outlook which is less awful than had been expected.

That’s the budget out of the way.   Now let us clobber the pandemic.

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