Tax relief to have little effect

Evan Pickworth

INDIVIDUALS will have to tighten their belts this year, as the effect on their cash flow of the R9.3-billion in tax relief announced in last week's Budget Speech will be minimal once inflation has been factored in, tax experts have warned.

Changes to the way foreign company interest will be taxed is seen as the "next big thing" for the government in its drive to collect more revenue. "The tax relief is aimed at really low earners and the fuel-levy increases from April will wipe out any benefits," the project director for tax at the South African Institute of Chartered Accountants, Piet Nel, said.

"Relief is only coming for people earning below R200000, so all the others are not inflation-adjusted benefits," he said.

EY tax director Vedika Andhee said individuals earning a taxable annual income of R200,000 could expect to take home only R106 extra a month.

"This additional disposable cash will probably be 'consumed' by the resultant increase in food prices likely to occur once the fuel levies increase on April 2," she said.