Although sin taxes — alcohol and cigarettes — have seen an upward tax increase in the past few years, tax specialists predict that Finance Minister Trevor Manuel will announce a further increase on these items in this year’s eagerly awaited budget.
Durban-based BDO Spencer Steward KwaZulu-Natal tax director Graham Earle has predicted a substantial increase on excise duty on alcohol and cigarettes.
In last year’s budget, sin taxes were increased by 10%, and he anticipates a minimum increase of at least the same this year.
Earle is also predicting that the tax threshold for individuals will be increased, while motor-vehicle allowances will be decreased. Last year, the finance minister announced a range of new tax reforms to tighten the noose on the abuse of car allowances, which he said had cost government billions of rand in revenue.
Earle is, however, hopeful of a reduction in secondary tax on companies, and a substantial decrease in tax on retirement funds and an increase in incentives for education grants.
“It would be a huge relief for retirees to see a substantial reduction on retirement funds tax,” says Earle, “and an incentive on the education grants will provide the kind of driver required for companies to accelerate the much-needed skills development to narrow the skills gap in the country.”
The current learnership allowance provision provides that employers who offer qualifying learnerships may claim additional tax deductions.
The amount of the deduction varies and is limited to a maximum of 50Â 000 rand per employee, while generous allowances are also available for employers who employ and train disabled persons. — I-Net Bridge