Diana Kinyanjui 
A stark reminder as many South African take advantage of the public holidays during April.
Ordinary South Africans will effectively face a tax increase because the government has once again, decided not to adjust personal income tax brackets to keep up with the rising cost of living. This is according to Finance Minister Enoch Godongwana.
This means that as prices go up and workers get small salary increases just to keep pace with inflation, more of their income may fall into higher tax brackets. The Minister himself admitted that many taxpayers will see this lack of adjustment to the tax brackets as an effective tax increase.
“Think of it like this: even if you are not really earning much more in terms of what you can buy, a salary increase that only matches inflation might push you into a higher tax bracket. This is called “bracket creep”.
Says John Taylor, Head of Employee Benefits Consulting at Liberty Corporate Benefits.
“It means you end up paying a larger percentage of your income in taxes, even though your actual buying power hasn’t significantly improved.”
It’s important to remember that there are only 7.8 million people in South Africa who earn enough to pay personal income tax. This means that the burden of this hidden tax increase will fall on a relatively small group of working individuals.
An earlier version of the budget had even proposed giving taxpayers some relief from this bracket creep.
“However, the current decision to not adjust the tax brackets will mean that salaried employees will feel even more pressure on their already stretched budgets as the cost of everyday items continues to rise.”
Concludes Taylor
SALM TEAM 
