Ricochet News

Nene raises personal income tax, fuel and electricity levies

Feb 25, 2015
Nene raises personal income tax, fuel and electricity levies

Government will increase taxes on personal incomes and also hike levies on fuel and electricity to raise revenue, Finance Minister Nhlanhla said during his maiden and 2015 National Budget Speech on Wednesday.

Personal income tax will go up by one percentage point for all salaries above 181 900 rand ($15,905) a year, Nene told parliament. The total fuel levy will be increased by 80.5 cents a litre as from April 1, Nene said.

Nene also introduced several tax measures aimed at promoting energy efficiency and helping power utility Eskom keep the lights on in Africa’s most advanced economy.

"The tax proposals aim to increase tax revenue as required, limit the erosion of the corporate tax base, increase incentives for small businesses and promote a greener economy," Nene said.

The government estimates that tax revenue would reach 979 billion rand ($85.47 billion) in the 2014/15 fiscal year, about 14.7 billion less than the budget estimate in the previous year.


South Africa’s power system has been constrained as Eskom scrambles to carry out maintenance on its aging fleet and bring new power stations on line.

In a proposal to assist with demand management, Nene said he would introduce a temporary increase in the electricity levy, to 5.5 cents per kilowatt hour (kWh) from 3.5 cents/kWh, which would be withdrawn when the electricity shortage was over.

"In the absence of a carbon tax, the electricity levy serves both to promote energy efficiency and encourage lower greenhouse gas emissions," Nene said.

Nene said the carbon tax would be introduced next year.

Government was also considering a levy on intensive consumers and exporters of electricity - those using in excess of 800 000 megawatt hours a year - in a bid to close gaps favoring them, the National Treasury said.