Article: Karin Muller, Sanlam Personal Finance
Healthcare
With R360,0 billion set aside to improve access to healthcare over the next three years, it's clear that Government is committed to ensuring all South Africans can access quality healthcare services. But what is clear – and was mentioned in last year’s budget too – is that Government currently does not have sufficient money to implement the entire NHI scheme. So where will the money come from?
Alternatives that will be explored include an increase in VAT, removal of medical subsidy and a payroll tax. But, since these options are only being investigated, they will not implemented this year.
Since implementation of the NHI scheme will be phased in, consumers will not immediately benefit from the NHI scheme – although some will hopefully begin to experience improved servicing and benefits. If you currently have medical aid schemes to provide for your medical needs you will need to keep on providing for your medical aid needs through the payment of a monthly premium.
Education
As job creation is Government’s number one priority for 2011, spending on education is likely to be a focus point in the years to come. And, while R8,2 billion has been allocated to improve school facilities over the next three years, Government is adamant that it cannot do it alone and that business, parents, communities and learners will have to play their part.
Personal tax
The changes to personal income tax are basically adjustments for inflation. Commentators often refer to this as “bracket creep”. Bracket creep means that when you get your increase during the year you might be paying more tax on that extra bit of income. But Muller says that if we earn more to combat the effect of inflation, it does not help if this extra income disappears due to tax. As such, the Minister has adjusted the brackets to allow for inflation.
The tax threshold has been increased from R57 000 to R59 750 for taxpayers younger than 65. When it comes to the interest exemption, it means that you do not pay tax on the first amount of interest you earn. So if you are younger than 65, you will only pay tax on interest if you receive more than R22 800 a year. If you are between 65 and 75 you will only pay tax if you receive more than R33 000 of interest a year.
Retirement funding
Currently if your employer makes contributions to your pension fund or retirement annuity fund on your behalf, you are not taxed on this. But this will – from 1 March 2012 – be seen as a fringe benefit which means you will be taxed. Despite this, you will be allowed to deduct up to 22.5% of taxable income for contributions to pension, provident or retirement annuity funds.
The aim of retirement funding is to provide consumers with an income during retirement. Previously with Provident funds you could take the entire amount at retirement, whereas with a Pension fund and a retirement annuity you were only allowed to take one-third of the value at retirement and the rest you had to use to invest to provide you with a pension income during retirement. However, the Minister is proposing that we make all of this a lot simpler so it is less confusing for consumers.
The further benefit is that the money invested to provide an income during retirement will be used for this purpose and not as a lump sum. These and other changes suggested will not affect consumers immediately, but will be introduced over time.
Buying and selling property
The transfer duty exemption threshold will be increased from R500 000 to R600 000. So you will pay less transfer duty if you buy a property valued greater than R600 000. If you buy a property valued at R1 million you will pay transfer duty on only R400 000 of the value of the property.
Sin taxes
Excise duties on alcohol will increase between 4.5 and 10.3%, and taxes on tobacco products will increase between 6 and 10.2%. This means you’ll pay 80 cents more for a packet of 20 cigarettes.
Increases in “sin taxes” mean that you would have to look at how much you spend every month on tobacco, alcohol and fuel and increase the allocation to these expenses or alternatively reduce how much you use.
'Travel' tax
The general fuel levy will increase by 10 cents a litre on both petrol and diesel on 6 April 2011; the Road Accident Fund levy will increase by 8 cents to 80 cents a litre; and there will be an increase in air passenger departure tax on international flights from 1 October 2011.
For electricity users:
The good thing is that even though there is an increase in the levy for non-renewable energy this will not affect your pocket since what we pay as consumers has already been taken into account when the National Energy Regulatory decided on the tariffs.