For many years we have enjoyed the benefit of tax revenue collections outstripping economic growth. This contributed to our capacity to expand public service delivery. This year, revenue has lagged behind the economy, leading to a R30 billion shortfall by comparison with the budget estimate a year ago. The revenue shortfall is mainly in personal income tax, value- added tax and customs duties. This reflects slower growth in wages, employment and bonus pay-outs last year, amongst other factors.

Our current expectation is that total tax revenue for 2016/17 will be R1.144 trillion, which is an increase of 7 per cent on the previous year.

The tax proposals this year will raise an additional R28 billion, by comparison with revenue estimates based on full adjustment of personal income tax and excise duties for inflation.

The main tax proposals are:

Relief will be provided in the affordable housing market through an increase in the threshold above which transfer duty is paid from R750 000 to R900 000. The annual allowance for tax free savings accounts will be increased to R33 000. The medical tax credit will be increased in line with inflation this year. It should be noted though that consideration is being given to possible reductions in this subsidy in future, as part of the financing framework for National Health Insurance.

Further consultations are currently taking place on the tax on sugary beverages. Arising from these discussions, and working closely with the Department of Health, the proposed design has been revised to include both intrinsic and added sugars. The tax will be implemented later this year once details are finalised and the legislation is passed.

The proposed carbon tax and its date of implementation will be considered further in Parliament this year.