Personal tax rates for 2017 have changed
Every individual earning taxable income over R63,556 is by law to pay tax to the South African Revenue Service (SARS), regardless of the income source provided it is in your personal capacity.The recent budget speech outlines personal tax rates for 2017, which are especially harsh on wealthy folks and those who pay personal tax.
Various new websites shed some light on the overall personal tax rate for 2017. The recent budget speech outlined a focus aimed at higher earning individuals, those earning R1.5m and more per annum are to pay a tax rate 45%. In relation to 2016, the fiscal then was to bring relief to low and middle income groups, which resulted in a tax rise for the wealthy but not as heavy, with minimum fiscal drag relief. During this time the tax rate for higher income earners was at 41%.
While those in the wealthier bracket have to resort to a higher tax rate, personal tax rates for 2017, with regards to business owners with corporate income tax didn’t see a hike nor rise at all in their tax and VAT rates payable. The tax hike on personal tax is said to be the solution to compensate the R28 billion shortfall 2016-2017. Tax expert Matthew Lester reported that personal tax showed to have increased since 2011 with 33% to a whopping 38%
It’s also concluded that as a whole, all tax payers will be paying R16 billion in the year to come because of the increased rate, this including the 45% of the wealthier group. Tax rates are charged to help balance finances of the country and to help aid those earning in a lower bracket. However, households will still have to deal with the rise in VAT on goods and still bear the brunt of an ever-rising economy in future. Investors relying on their dividends as income also saw a hike in rates from 15% to 20% according to Werksmans.
Concern was shown by Werksmans Attorney’s representative Doelie Lessing that the large hike could see South Africa’s wealthy folks choosing to live elsewhere in the world, and worse skip on their taxes. Especially if steep hikes becomes a regular scenario.
According to an article by Business Tech 2015, South Africa ranks 31st in the world with personal tax rates which at the time was at 41%. In the past it was level at 32nd position at 41% tax rate with countries Croatia, Uganda and Chile.
South Africa is thus ranked one of the highest paying tax countries in the world offering very little returns.
Despite the talks about the personal tax rates for 2017 and the hike aimed at wealthy people, in essence, it still affects everybody in the end. Whether you pay tax in your personal capacity, as an income tax payer or not illegible but deal with the constant rising South African economy, either way, you’ll feel the crunch.