CAPE TOWN: A report by trade union Solidarity has dismissed the R16bn tax relief the government announced in the 2013-14 budget by then finance minister Pravin Gordhan as a myth. The Real Tax Issue report‚ compiled in conjunction with investment firm ETM Analytics‚ shows taxpayers were actually impoverished during this “tax relief”.
What was announced as tax relief were adjustments to prevent the tax burden of people whose nominal income rose steadily to keep pace with consumer price index (CPI) inflation from rising at the same rate‚ the report states. It argues that the level at which one starts paying income tax was, for example, lifted by 5.6% in 2013 and 5.35% last year.
These hikes did not adequately compensate for CPI inflation‚ but over the same period CPI inflation was on average at 5.6% and 5.7% in each year respectively. The report says this means someone whose income kept pace with CPI inflation since 2012 has had to cede a gradually growing proportion of that income to tax. Solidarity senior researcher Paul Joubert said with the receiver taking more and more‚ it was difficult to keep up.
