Godongwana spells taxpayers’ nightmare after decision not to adjust personal tax brackets
Finance Minister Enoch Godongwana said the absence of an adjustment of the personal income tax tables can be perceived as a tax increase by many taxpayers, as their inflation-adjusted income means larger proportions of their incomes fall in higher tax brackets.
Finance Minister Enoch Godongwana answers questions from the media about the 2025 budget tabled. Picture: GCIS
CAPE TOWN - Finance Minister Enoch Godongwana has told Parliament that taxpayers will indeed face a higher “tax burden” because of the Treasury’s decision to not adjust personal tax brackets in line with inflation.
He made the acknowledgement in a written parliamentary reply to a question from the Democratic Alliance (DA)’s Wendy Alexander, who asked him how Treasury justifies a “silent tax increase” that disproportionately punishes working class South Africans.
Godongwana said the absence of an adjustment of the personal income tax tables can be perceived as a tax increase by many taxpayers, as their inflation-adjusted income means larger proportions of their incomes fall in higher tax brackets.
Alexander said the Treasury’s decision not to make personal income tax bracket adjustments effectively imposes a R19.5 billion tax hike on South Africans and working-class families.
She said South Africans are already struggling with the cost-of-living crisis and questions the justification for what she calls a “silent tax” and comes as the country also faces a value-added tax (VAT) increase.
In his response, Godongwana said the non-adjustment won’t lead to “reduced disposable incomes” compared to the previous year, but acknowledged that “taxpayers will face a higher tax burden”.
He said National Treasury’s proposal not to adjust the personal income tax brackets and rebates for inflation is driven by the “significant fiscal pressures government is facing”.
Godongwana said these include the need to boost front-line services like health and teaching, provide social relief and also increase infrastructure spending.
“As a result, it was not possible to adjust the tax brackets without compromising the government’s objective of alleviating immediate fiscal pressures and maintaining its commitments to the fiscal strategy,” said Godongwana.
He said to limit similar budget pressures in the future and safeguard workers’ interests, the government will continue exploring mechanisms to boost revenue collection, like broadening the tax and closing tax loopholes.
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