Few surprises in Manuel’s Budget

Lower to middle-income earners are the main beneficiaries of modest personal income tax relief in 2004/05, tax exemptions on interest and dividends are raised, but fuel levies are increased, Finance Minister Trevor Manuel said yesterday.

Presenting his Budget for the new financial year in the National Assembly, Manuel also announced increases in social grants, and spending on social development and the fight against HIV and Aids. While last year’s individual tax relief of R13,3-billion could not be matched, mainly due to slowed revenue collection, taxpayers would still save R4-billion in 2004/05 to compensate for the effects of inflation, he said.Sixty percent of this relief will go to workers earning less than R150 000 a year.The primary rebate is raised from R5 400 to R5 800, increasing the threshold below which people do not pay any income tax to R32 222.For those 65 and over, the threshold is raised to R50 000.The domestic interest and dividend exemption threshold, effective from March 1, is increased by ten percent for people under the age of 65, from R10 000 to R11 000; and for those 65 and over, from R15 000 to R16 000.Manuel also announced an increase in the exemption threshold for transfer duty on homes to R150 000 from the beginning of next month, to help house buyers in the lower end of the market.In April, pension and disability grants increase by R40 to a maximum of R740, and the child support grant to R170 a month.However, the general fuel levy on petrol and diesel is raised by ten cents a litre to R1,11 and R0,95 respectively from April 7, and the Road Accident Fund levy by five cents.But, to offset the fuel levy increases, the diesel fuel rebate is increased by 15 cents a litre, to provide relief for the agricultural, forestry, and mining sectors.Manuel said the projected budget deficit for 2004/05 was 3.1 per cent of GDP, and the Reserve Bank’s inflation barometer, CPIX, should average 4.8 percent and remain firmly within the target range of three to six per cent over the medium term.Economic growth was projected at 2.9 per cent.- nampa-SapaWhile last year’s individual tax relief of R13,3-billion could not be matched, mainly due to slowed revenue collection, taxpayers would still save R4-billion in 2004/05 to compensate for the effects of inflation, he said. Sixty percent of this relief will go to workers earning less than R150 000 a year. The primary rebate is raised from R5 400 to R5 800, increasing the threshold below which people do not pay any income tax to R32 222. For those 65 and over, the threshold is raised to R50 000. The domestic interest and dividend exemption threshold, effective from March 1, is increased by ten percent for people under the age of 65, from R10 000 to R11 000; and for those 65 and over, from R15 000 to R16 000. Manuel also announced an increase in the exemption threshold for transfer duty on homes to R150 000 from the beginning of next month, to help house buyers in the lower end of the market. In April, pension and disability grants increase by R40 to a maximum of R740, and the child support grant to R170 a month. However, the general fuel levy on petrol and diesel is raised by ten cents a litre to R1,11 and R0,95 respectively from April 7, and the Road Accident Fund levy by five cents. But, to offset the fuel levy increases, the diesel fuel rebate is increased by 15 cents a litre, to provide relief for the agricultural, forestry, and mining sectors. Manuel said the projected budget deficit for 2004/05 was 3.1 per cent of GDP, and the Reserve Bank’s inflation barometer, CPIX, should average 4.8 percent and remain firmly within the target range of three to six per cent over the medium term. Economic growth was projected at 2.9 per cent. – nampa-Sapa