South Africa has increased income tax rates for the first time in 20 years. The first increase since 1995, the move is likely to be unpopular with the public and businesses suffering from persistently lacklustre growth since the 2009 recession.

Income tax:

The proposals on income tax are as follows:

• Increase marginal personal income tax rates by one percentage point for all taxpayers earning more than R181 900 per annum.
• Taxpayer with an income of R200,000 per annum will pay R21 per month more. (if younger than 65)
• Taxpayer with an income of R500,000 per annum will pay R271 per month more. (if younger than 65)
• Taxpayer with an income of R1,105,000 per annum will pay R1,105 per month more. (if younger than 65)

There is very little personal income tax relief via adjustments of tax brackets, rebates and medical scheme contributions. The consequences of the changes are:

• Total fiscal drag relief is R8.5 billion.
• Taxpayers earning less than R450,000 per annum will pay less.
• Taxpayers earning more than R450,000 per annum will pay more.

VAT:

• The VAT rate remains unchanged at 14%

Transfer duties on the sale of property:

• Rates and brackets to be adjusted to benefit middle-income households.
• No transfer duties payable on property transactions below R750,000.
• Decrease in transfer duties on property transactions between R750,000 and R2.3 million.
• Increase in transfer duties on property transactions above R2.3 million.

Grants:

• Old age, war veterans, disability and care dependency grants will increase by 4.4% or R60 to R1,410 per month.
• Child support grants increase to R330 per month.
• Foster care grants increase by 3.3% or R30 to R860 per month.