Initial reaction to Minister of Finance Trevor Manuel’s annual Budget speech has been favourable.
“It all sounds nice to me,” Efficient Group chief economist Dawie Roodt said.
“It is more or less what I expected,” he added.
Manuel had some good news for taxpayers on Wednesday in his 2004/05 Budget, although the R4-billion in personal-income tax relief did not match the whopping R13,3-billion he dished out in 2003/04.
Manuel said the revised revenue estimate for 2003/04 was R300,3-billion — R4,2-billion lower than the original estimate.
Revenue projection for 2004/05 is R327-billion.
“Although economic performance is expected to rebound this year, the weak revenue performance obliges us to be more prudent with tax relief,” he said.
Thus, the 2004/05 tax proposals contained a moderate easing of the tax burden on individuals, and a somewhat higher tax incidence on tobacco products, alcoholic beverages and fuels.
“This year, we propose to reduce personal-income taxes by R4-billion, providing an adjustment that compensates taxpayers for the effects of inflation.
“At the lower end of the spectrum, there is some real relief. Sixty percent of this relief will go to workers earning less than R150Â 000 a year,” he said.
The primary rebate has been raised from R5Â 400 to R5Â 800, increasing the tax threshold to R32Â 222 for people under 65, and R50Â 000 for those 65 and over, Manuel said.
This means a person under 65 earning R40Â 000 a year will pay R1Â 400 — a saving of R400 — and a person earning R80Â 000 a year will pay R9Â 020 — saving R680. — Sapa