BY MBONGENI NDLELA
LOBAMBA – It is good news for low-income earners and bad news for those who are considered high-income earners.
As a means to address income inequality, people earning E4 000 a month or less will not be taxed and those earning less than E250 000 a year (E20 833.33 a month) will not be affected by a proposed three percent increase on pay as you earn (PAYE) tax.
Currently, it is those who earn E3 500 and below who are not taxed.
Announcing this news when tabling the 2022/2023 budget on Friday, Minister of Finance Neal Rijkenberg said lifting the tax brackets so that paying tax will now start from E4 000 a month and implementing a three per cent increase (from 33% to 36%) on those earning more than E250 000 a year was meant to leave “more cash in people’s pockets” for the low-income earners.
“Individuals will now only starts paying tax from E4 000 per month instead of E3 500 per month. Unfortunately, we cannot afford to have this reduction other than lifting the upper limits of those earning more. The proposal is to lift the upper tax bracket from 33 percent to 36 percent. This would mean that 80 percent of the taxpayers would be better off with more money in their pockets and 20 percent of higher income earners paid more than E300,000 per year would be worse off. Mr. Speaker, it is understood that this will negatively affect everyone and I appeal to all of us to put the interest of the poor above our own. This measure will be addressing our income inequality,” the minister said.
Further, Rijkenberg said Government was proposing amendments to the Value Added Tax (VAT) legislation and would reconsider some non-vatable items “that are not pro-poor”.
Also, the minister said they would propose to have standard rated VAT on electricity but that this would not be applicable to electricity for domestic (household) use.
