Budget...

Finance Minister Pravin Gordhan is putting pedal to the metal with his 2011/12 national budget, blasting ahead with R800bn in infrastructure spending, with no plans to cut the budget deficit.

While this which might raise questions over fiscal prudence, the aggressive spending may keep the economy humming in difficult times.

However, the new budget, announced on Wednesday, holds little joy for those hoping tax relief.

Some of the highlights:
• From March 2011, tax will be payable only on income above R59 750 for taxpayers below the age of 65, and R93 150 for those 65 and older. The tax threshold for taxpayers aged 75 and older has increased to R104 261.
• An increase in the annual tax-free interest income to R22 800 for individuals below 65 years is proposed, and to R33 000 for individuals 65 years and over.
• The tax-free lump sum benefit upon retirement will increase from R300 000 to R315 000.
• From March 2012, an employer’s contribution to an employee’s retirement would be treated as a taxable fringe benefit. At the same time, employees would be allowed to deduct up 22.5% of taxable income for contributions to approved retirement funds, up to a maximum of R200 000 per year.
• Government is to increase the “luxury tax” on motor cars. The Budget Review said passenger cars and light commercial vehicles are subject to a “luxury” excise tax that increases with the price of the vehicle. Government proposes to increase the maximum nominal ad valorem excise tax rate on these vehicles from 20% to 25%.
• Motor vehicle owners, already hard hit by the oil price increase, face an increase in the fuel levy by 10c/l on petrol and diesel effective from 6 April 2011. The Road Accident Fund levy will be increased by 8c/litre on the same date.
• Ad valorem excise duties on computer monitors – some of which are used as television screens - will be reinstated at a flat rate of 7%.
• Gambling winnings above R25 000, including from the National Lottery, would be subject to a 15% withholding tax from April 2012.
• To support job creation, a youth employment subsidy in the form of a tax credit costing R5bn over three years will be introduced. It will be administered by the SA Revenue Service through the PAYE system.
• Businesses making Greenfield and/or brownfield investments qualify for tax relief. Greenfield investments in industrial development zones (IDZs) qualify for additional relief. Government will consider expanding incentives for labour-intensive projects in IDZs.
• Government and state-owned enterprises will spend more than R800bn over the next three years on infrastructure. The money will be spent on the money would be spent on new power stations, road networks, dams and water supply pipelines, rain and ports facilities, schools, hospitals and government buildings.
• Gordhan has downgraded expected economic growth for this year from 3.5% to 3.4%
• In a surprise move, there will be no cut in the deficit as a proportion of gross domestic product (GDP) in the new fiscal year, with the deficit budgeted at 5,3% in 2011/2012 from the same level in 2010/ National government debt was set to rise from R526bn at the end of 2008/09 to over R1,3-trillion in 2013/14.
• National Health Insurance will be phased in over 14 years. Funding options under consideration are a payroll tax (payable by employers), an increase in the VAT rate and a surcharge on individuals’ taxable income.
• Dividends tax becomes effective from April 1 2012 and secondary tax on companies will be discontinued from that date.

www.iol.co.za/business/gordhan-eyes-gambling-tax-1.1031052

Gordhan eyes gambling tax

February 23 2011 at 02:05pm
By Andisiwe Makinana

A high-stakes battle is expected with the powerful gambling industry as lotto, horseracing and soccer pools winnings are set to be taxed as from April next year.

And as of this afternoon, drinkers and smokers will cough up more to support their habits, while pensioners will have a R60 increase on their pensions to smile about as of April.

But it’s Finance Minister Pravin Gordhan’s announcement that all winnings above R25 000, including payouts from the National Lottery, will be subject to a final 15 percent withholding tax, that raises the stakes for gamblers.

Gordhan wasn’t hedging his bets, saying he hoped this would help discourage excessive gambling. But he is expecting to have to put on his poker face to win this round.

“Despite the obvious merits of this argument, I expect vigorous debate during the parliamentary process,” he said.

The withholding tax on gambling winnings was in line with practice in other countries including the United States, Gordhan said.

Drinkers will have to swallow a 4.5 to 10.3 percent hike in excise duties on alcoholic beverages, paying 6.4 cents more for a 340ml can of beer, up to R2.86 more for a bottle of spirits and 13.5 cents more for a bottle of wine, while smokers will feel the air closing around them as taxes on tobacco products will increase by between 6 and 10.2 percent.

They will pay 80 cents more for a packet of 20 cigarettes.

Other tax increases announced by Gordhan for this year include:

- the general fuel levy will increase by 10 cents a litre on both petrol and diesel on April 6;

- the Road Accident Fund levy will be increased by eight cents to 80 cents a litre;

- increases will take effect on October 1 in the air passenger departure tax on flights to international destinations;

- the levy on electricity generated from non-renewable and nuclear energy sources will increase by 0.5c /kWh to 2.5c/kWh from April. The increase would not impact on electricity tariffs, as it had already been taken into account in the National Energy Regulator’s approved tariff structure, said Gordhan.

Meanwhile, the state old age grant (pension), and the disability and care dependency grants will rise by R60 a month to R1140, while the increase will be a further R20 for pensioners over the age of 75.

Foster care grants will increase by R30 to R740, while the child support grant will increase by R10 from R250 to R260 in April and then to R270 in October.

Revisions are proposed to the means test thresholds.

Almost 15 million South Africans receive social grants, with 38 percent of them going to pensioners, children in poor households (35) and 10 percent to the disabled. - Political Bureau

BLA BLA BLA

Gee Sylvester you have such a way with words8-)

Same year different shite.

I was expecting VAT increase to 17% wait for next year i guess.

More money for more crooks.

I will stock up on JW from Duty Free each month.

And Blackjack i will move from table to table just before 25k reached if so lucky. i have 40 or so Zimbabwean temp visa' that i used to get all my Cell phones RICA' approved. They will have to come with me to Sun City and get MVG cards now as well.

This could be a final nail(td)

I can see the point of a withhold tax on Lotto and slots,where there is no takeout,on large wins,but if you looking for more income from gambling why not the same tax on sports betting as horseracing and leave it at that.....why should they be exempt?
If it impacts on horseracing,an exotic tote bet,that qualifies for the new tax,would mean a final takeout of nearly 40%.....absolute bullshit and the industry needs to argue the situation strongly.

Sports betting no longer needs the tax break,they are already the way ahead for punters..

reminds me of the constipated chancellor of the exchequer...he couldn't "Budget"

More theft at gunpoint.

Oh, well. So it's time to dust off the old bucket shop again.

Expect to see a massive increase in 'off the book' punting - just as it was when betting tax used to be 12%. You can't ever accuse government of learning from past mistakes!

Bring back Prohibition boys - Speak Easy here I come- Silly move