CAPE TOWN: In his first full Budget speech since taking office last year, South African Finance Minister Nhlanhla Nene of the ruling African National Congress (ANC) raised the top personal income tax rate by one percentage point, to 41 percent, together with fuel and electricity levies.
South Africans earning above R181,900 (US$15,634) a year are affected by the income tax hike. Fuel levies are to rise by 80.5 cents per litre, with 30.5 cents of that attributable to the general fuel levy, and 50 cents per litre going towards the Road Accident Fund (RAF) levy.
The increase in fuel levies means consumers will no longer benefit from the drop in the international oil price over seven consecutive months. Barring any increase in the international price, the retail cost of a litre of petrol is now projected to rise some 10 percent in March.
Nene admitted that the 50 cents per litre rise in the RAF levy was a substantial increase from the present level of R1.04 per litre. “It is required in order to finance the progress made by the RAF administration in clearing the claims backlog,” he said. “But it also reflects the unsustainability of the current compensation system, which has accumulated a R98 billion unfunded liability.”
Regarding funding for the state-owned power utility ESKOM, Nene announced an increase in the electricity levy from 3.5 cents per kilowatt-hour (kWh) to 5.5 cents per kWh. “This additional 2 cents a kWh will be withdrawn when the electricity shortage is over,” he said.
