How Tax Bracket Creep Will Hit Your Pocket

SOUTH AFRICA’S MINISTER of finance, Enoch Godongwana, made it clear he was looking for R15 billion before his budget speech last week.

The simplest, neatest way to do this was by not adjusting the tax income tables for inflation.

While you may think you got off lucky because your tax contribution did not increase, this may not be the case, thanks to bracket creep.

If you are earning at a level that puts you at the top end of a tax bracket and you get an increase in the next year, that could push you into the next bracket – where you will pay more tax.

For example: If you were earning R30 000 in January, your annual salary would be R360 000, and that would put you in the second tax bracket, where your income tax rate is 26%.

If you receive a 5% increase, your annual salary climbs to R378 000, which pushes you into the next tax bracket, where your income tax is now 31%.

If the brackets had been adjusted for inflation, you would still have fallen into the 26% income tax bracket.

SIN TAX

Sin taxes never fail to increase. You can expect the following price increases:

• A can of beer: 14 cents more;
• A can of cider or an alcoholic fruit beverage: 14 cents;
• A bottle of wine: 28 cents;
• A bottle of fortified wine (such as sherry): 47 cents;
• Sparkling wine: 89 cents;
• A bottle of spirits (gin, vodka, tequila): R5,53;
  Smokers can expect to pay 97 cents more for a pack of cigarettes, 57 cents more for pipe tobacco, and R9,51 more for cigars. Vapes will cost 14 cents more per millilitre.
• Manufacturers and retailers haven’t pushed through their price increases on tobacco products yet, so you could save a few bucks by stocking up on smokes.

MEDICAL TAX CREDITS

While you can still claim medical tax credits, the amounts remain unchanged at R364 per month for the first two medical aid scheme members, and R246 per month for additional members.