#Budget2017: Commentary From Rob Cooper At Sage

#Budget2017: Commentary From Rob Cooper At Sage


On the new personal income tax bracket for top earners

“I am not surprised by the rise in the top marginal income tax rate to 45%, given the R28 billion revenue gap Minister Gordhan needed to plug. As a form of wealth tax, it’s more politically acceptable than a VAT increase; like the National Minimum Wage, it also has a redistributive effect that could help reduce inequality.

“That said, given that high-income earners in South Africa already carry a heavy tax burden, government should perhaps be cautious about adding too much more to it in the next Budget Speech. There is a balance to be struck between collecting a fair share from the wealthy and taxing them so heavily that tax avoidance or moving overseas become attractive options to them.”

Related: 7 Top Tax Tips For SMEs

On the increase in dividends tax

“The increase in withholding tax on dividends from 15% to 20% is significant since it will raise a further R6.8 billion for the fiscus. While it’s a relatively equitable tax increase in an environment with little room for manoeuvre, it could affect pensioners who depend on income from dividends as well as discourage savers. Also noteworthy is a change to the law that includes three categories of dividends in remuneration from 1 March 2017. This means that these dividends can be potentially taxed at 45% – it was 41% before. “

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