"Personal income tax relief will be limited with individuals being at least partially compensated for bracket creep or the effects of inflation," Nedbank said in a statement.

The circumstances could hardly be tougher, with government finances under significant pressure following the rapid deterioration in the global and local economic climate in 2008 and in 2009.

Nedbank said inflation had moderated over the past year, and this implied tax relief for individual taxpayers was likely to be well below the R13.6-billion granted last year. However, low and middle-income taxpayers were likely to get more relief than high-income earners.

According to Nedbank, the tax threshold was likely to be lifted from the current R54 200, but the top marginal tax rate would probably remain unchanged at 40 percent.

Nedbank expected the marginal raising of exemptions on domestic interest and dividend payments to continue. This was compensation for the effects of inflation.

"The exemptions currently stand at R21 000 for taxpayers under 65 and R30 000 for those over 65."

Nedbank said it did not expect a reduction in the company tax rate, which was dropped by one percent to 28 percent in the 2008/09 budget. "We do not anticipate further relief for companies, given that the economy is recovering."

It said the VAT rate should remain unchanged at 14 percent and there would be "the usual" above-inflation increases in excise duties.

 
                                                                                       Cecilia Helland