Presenting the 2004 Budget in Parliament yesterday, Manuel said that, although economic performance is expected to rebound this year, the weak revenue performance obliges government to be more prudent with tax relief.
“The tax proposals contain a moderate easing of the tax burden on individuals and a somewhat higher tax incidence on tobacco products, alcoholic beverages and fuels,” he explained.
“As our economy weakened last year, similarly, our revenue collection has slowed. The revised revenue estimate for 2003/4 is R300,3-billion, or R4,2-billion lower than the original budget estimate,” he added.
The shortfall is mainly in company tax receipts, Manuel said, adding that, in recent years, the country’s tax reforms have raised revenue from companies significantly, contributing to scope for personal income tax relief.
“This has unavoidably increased the volatility of overall revenue trends somewhat. Tax policy over the past decade has been completely reshaped. We have changed from a source-based tax system to taxing the global earnings of South African residents,” he remarked.
“We have begun taxing capital gains, reduced corporate tax rates, and made substantial reductions in personal income tax rates, especially for low- and middle-income workers. We have zero-rated paraffin, reduced ad valorem excise taxes and introduced a lower tax rate for small businesses,” Manuel said.
In total, government has announced over R72-billion in tax cuts since 1994.
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