Budget2021: Relief for households as Treasury revises tax brackets

Johannesburg – The personal income tax brackets and rebates will increase by 5 percent, providing relief to households by ensuring that inflation does not automatically increase the individual tax burden, the National Treasury said on Wednesday.

Announcing the projected Budget for the next three years, Treasury said this adjustment will reduce tax revenue by R2.2 billion. A previous announcement to introduce tax measures to raise R40 billion has also been withdrawn.

This comes after many South Africans found themselves unemployed due to the impact of the COVID-19 pandemic. Economic activity was halted when government implemented a hard lockdown at the end of March last year.

This led to government introducing a R500 billion social relief package to support households and businesses, among other sectors.

“Most of the relief benefits lower and middle-income households. If the tax tables were not adjusted this would have raised R11.2 billion.

“An inflationary adjustment will apply to the value of medical tax credits, which will increase from R319 to R332 for the first two members, and from R215 to R224 for all subsequent members,” the department said ahead of the tabling of the 2021 Budget.

Treasury said the minimum value for paid-up retirement annuities has not been adjusted since 2007/08. This value will increase from R7 000 to R15 000 from 1 March 2021.

Also read: Budget2021: Less smoke and hangovers as excise duties go up

“To support the economic recovery, government will not raise any additional tax revenue in this Budget.

“Substantial tax increases in previous years have raised less revenue than anticipated due to their impact on taxpayer behaviour and growth.

“Tax increases initially proposed in the June 2020 special adjustments budget are withdrawn. Given the better-than-expected revenue performance in the second half of 2020/21, there is no longer a need to implement these measures and their withdrawal will not widen the budget deficit.”

The expected revenue loss will be offset by an increase in excise duties on tobacco and alcohol.


The National Treasury said, meanwhile, that government proposes an inflation-related increase of 15c/litre in the general fuel levy and a higher-than-inflation increase of 11c/litre in the Road Accident Fund levy, with effect from 7 April 2021.

Have you read: Budget2021: R9 billion cash injection for COVID-19 vaccine programme

– SAnews.gov.za

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