'Encourage savings culture'
Financial experts say Finance Minister Trevor Manuel should have done more in his Budget to encourage people to save regularly and invest towards their monetary future.
The experts argue that measures aimed at breaking the cycle of over-spending and over-indebtedness could have gone a long way towards encouraging a savings culture.
www.justmoney.co.za, South Africa's online guide to money management, said though Manuel had eased the tax burden on individuals, he did little to persuade people to save the extra money he put in their pockets.
In his Budget Speech on Wednesday, Manuel made minor adjustments to the tax-free thresholds relating to interest, foreign dividends and capital gains tax.
Interest thresholds for individuals under 65 years of age have increased from R18000 to R19000 a year, while the threshold for individuals older than 65 years has been increased from R26000 to R27500 a year.
The foreign dividend exemption has been increased from R3000 to R3200. He proposed that the capital gain or loss thresholds be increased from R15000 to R16000 a year.
Old Mutual believes the dismal level of savings in the country was of concern and said it welcomed any measures that would create incentives for South Africans to save.
Rod Stevenson of Old Mutual said the increases in the tax-free threshold for interest and dividend income should go some way in encouraging individuals to save for their retirement.
He said with the new thresholds, a person under 65 years with approximately R211111 invested in a money market account earning 9 percent a year, will not be taxed for any of the interest income, assuming he has no other interest income.
Individuals over 65 can have up to R300000 invested under similar conditions with no tax on interest income.
Paul Beadle, general manager of www.justmoney.co.za, said: "Manuel has successfully steered South Africa through an economic boom. However, that growth was also stoked by excessive spending driven by easy access to credit.
"Now people are struggling to repay debt and Manuel needs to help foster a culture of financial responsibility."
Beadle said his company would have liked the finance minister to have announced measures to help encourage the savings culture and boost the economy.