The budget speech 2021/2022 presented by Finance Minister Tito Mboweni, was a tense affair this year with not much jest. “These are not austerity measures” was a stern point raised.Above inflation tax bracket changes were a welcome relief this year. With additional relief to lower-income earners. Here are the new tax tables for 2022 financial year. For the full tax guide follow the link from our Tax services page.
At the same time, this relief was dampened by further increases in fuel levies which impact all people in South Africa, including Gogo who needs to catch the taxi to go by groceries; Mom who needs to drop children at school every day; Industry that delivers goods to ports; Agriculture that delivers food to our plates. It is understandable that government needs to find additional income, they are backed into a corner. With the recent drastic reduction in attorney support of the Road Accident Fund, by changing the system to reduced in-house legal teams, one questions the need to further tax the fuel levy. The perpetual lack of service of our roads raises concerns about where these funds are being channelled too. Let us have hope, that the increased levy will see roads infrastructure being improved throughout the country.Looking to all these various other means to increase taxes is, however, not the solution to solve governments problem. They need to clean up their wage bill, employ effective staff at all levels of government, that can deliver services and implement growth projects for our economy. They need to stop wasting money on ineffective staff that continue to promise services but never deliver. Endless promises, meetings and plans don’t produce growth. Hard-working people, with hope and a plan do.
An interesting turn of events and a wise move by finance is to start reducing company tax rates. The implementation of the 27% Company tax from April 2022 is going to bring South Africa closer to international standards. This should also stimulate and encourage growth in companies by re-investment of profits back into development and infrastructure, thereby growing asset values and company value. There will be further relief on shareholders having a lower effective tax on earnings and dividends thus encouraging foreign investors back to the South African investment market.
Implementation of infrastructure expenditure is a positive stimulus needed in the engineering and structural labour industry which has been stifled for years by governments slow and limited expenditure. The leaning seemed to be toward our borders and ports again, which indicates that South Africa is looking at building capacity for export and import and improving the attractiveness and ease of use of our facilities. Simplifying and improving our ports will make the export of fresh produce and other products a success, and will improve the GDP of South Africa.
Small business corporations continue to benefit from the reduced tax rates which were adjusted again this year at the lower end. Unfortunately, you will notice the R365,000, and R550,000 brackets remain exactly the same. This means that small business is losing on inflation shifts each year. We need to encourage the Finance Minister to consider the relief in these brackets before the 7% bracket has no space left.
The expectation is that the economy will remain tight until 2023, where the additional debt government has entered into will start to stabilise. But this requires the effort of everyone, the focus of everyone. We need to grow and strengthen our economy, in tough times, to build income-generating operations that reduce debt and not suck up our taxpayers' funds. Government needs to clean up public enterprises that are malfunctioning on every seam. Mr Mboweni it is time to do proper business. Business that grows our economy. I am sure you are aware that there is no room for error now. Let us all make our small difference and effort this year to grow and strengthen South Africa our beautiful land.
Business Soul Accounting is located at the Quarry Lifestyle Centre, Pin Oak Avenue in Hilton, KZN.
Written and supplied by Sheldon Conway.