This afternoon, the much-anticipated Budget Speech was tabled by Finance Minister Godongwana at Cape Town City Hall. Delivered against the backdrop of a projected revenue shortfall of R54 billion for the 2024/25 financial year, the Budget Speech contained the following tax-related measures to alleviate immediate fiscal pressures and stabilise debt servicing:
No adjustments for income tax, medical scheme tax credits
To raise revenue, there are no adjustments to the personal income tax tables or medical scheme tax credits to account for inflation. Absent adjustments for inflation, taxpayers who received a salary increase in 2024 will pay more tax, or may find themselves in a higher tax bracket. Further, there are no increases to individual tax rebates, which remain at R17 235.00 for individuals, with additional rebates of R9 444.00 for those aged 65 and up, and R3 145.00 for persons 75 and older. Similarly, medical tax rebates shall remain unchanged at R364.00 for members, R364.00 for first dependents, and R246.00 for each subsequent dependent.
Sin taxes
As expected, excise duties on alcoholic beverages and tobacco products shall increase by 6.7% to 7.2% and 4.7% to 8.2%, respectively. This translates to consumers paying R0.14 more for a 340ml can of beer, R5.53 more for a 750ml bottle of spirits, and an additional R0.28 for a 750ml bottle of wine. Cigars will set you back an additional R9.51 and the cost of cigarettes increases by R0.97. Following last year’s introduction of a flat excise duty rate of R2.90/ml on nicotine and non-nicotine solutions, vapes will cost R0.14 more per millilitre.
Environmental taxes
Effective 1st January 2024, the carbon tax increases from R159.00 to R190.00 per tonne of carbon dioxide equivalent. From 3rd April 2024, the carbon fuel levy will rise by R0.14/l for diesel and R0.11/l for petrol.
The plastic bag levy is set to increase from R0.28 a bag to R0.32 from 1st April 2024, whilst the incandescent light bulb levy will rise from R15.00 to R20.00 per light bulb from 1st April 2024 to incentivise the shift to more efficient lighting sources.
Global minimum corporate tax
Anticipated to raise R8 billion in 2026/27, a global minimum corporate tax rate of 15% shall be enforced against all multinational corporations with revenues exceeding EUR 750 million per annum, regardless of where their profits are generated.
Mindful of rising food and petrol costs, the Minister confirmed that there will be no increase to the general fuel levy for the 2024/25 financial year, which will result in tax relief of approximately R4 billion.
Regrettably, there was no mention of extending the short-term, rooftop solar tax rebates for individuals, which is set to end 29th February 2024.
