Chairperson and hon members, this piece of legislation now legitimises all the tax breaks that you've had from the Budget announcement earlier this year. It records the different rates and monetary amounts that will now become part of law. Just to remind ourselves, when we made the announcement in February this year that this Budget provided R9,5 billion of personal income tax relief, which was R2 billion above inflation, this is something that will help South Africans both to meet their indebtedness on the one hand and to save money on the other hand.
The Budget also made a special dispensation for individuals under the age of 65 whose tax threshold now went up to R63 556, which means that below that amount you don't pay any tax. Individuals from the ages of 65 to 74 are exempt up to R99 000, and individuals above the age of 75 are exempt up to R110 889. All of these are important steps which are made possible, as the chairperson of the committee, Mr Mufamadi, pointed out, as a result of the excellent tax compliance that we enjoy in South Africa.
Let me respond and firstly reinforce what the chairperson of the committee said, that our fiscal policy is a very carefully calibrated approach which ensures, hon Ross, that we don't end up with any unsustainable situation. I can see that you are a bit alarmed about several of the issues, such as tolls, admin costs and the National Health Insurance, NHI, but we repeatedly provided assurances both to the committee and to the Chamber that we have a sustainable fiscal framework. This administration is very committed to working within that fiscal framework.
I also want to underline what Mr Mufamadi said in relation to tax revenues and tax compliance in South Africa. We are very privileged to have the kind of tax compliance we do, and we can see elsewhere in the world what lack of tax compliance does to fiscal sustainability and the welfare of nations. There are several examples to the north of us. The third point that he made, which is equally important, is that we often see much written in newspapers about only 5 million taxpayers contributing to the tax revenue in South Africa. He very importantly points out that tax is not just income tax. Income tax is about 30% of our total revenue, and every person who buys something pays VAT, every person who consumes something pays excise tax. Sometimes, of course, they consume wrong things and still pay excise tax. We have, indeed, a fairly broad tax base from that point of view, although, at the same time, we must acknowledge that we need to widen that tax base as the economy grows.
The hon Ross says that we are not doing much for growth. Well, disposable income in the hands of the taxpayers means we that are supporting consumption. There are any number of incentives in our tax system, hon Ross, which also support growth and support enterprises in various aspects, whether it's the motor industry, the clothing and textile industry, or the more recent package announced by Minister Davies in relation to the competitiveness package as well. You also said that we are heavily taxed, and we are now crossing over the border into being overtaxed. I respectfully disagree with you. We can compare our numbers at some point in time. Our tax system is highly competitive, world-class in every respect and, certainly, South Africans cannot say that they are overtaxed.
Our tax-to-gdp ratio of 25% shouldn't be an embarrassment; it should be a point of pride. Those countries that have tax-to-GDP ratios below 20% are countries that are not fully collecting taxes in their countries as they should. Tax-to-GDP ratios in Europe, because of social security contributions, go well above 35%, and I think it's important that we compare apples with apples in this particular instance to get a proper perspective on the tax-to-GDP ratio, and you will recall that I have said on many occasions that prior to the recession, our tax-to-GDP ratio was closer to 28%, and we went down to just over 23%. We are barely recovering from the impact of the recession on the revenue intake of South Africa.
The hon Ambrosini, once again, has his own peculiar way of looking at taxation, which is a highly understandable matter, but I think he is a bit strong when he starts claiming that things are unconstitutional, and I am sure that if the chair of the committee had an opportunity, he would appropriately respond to that.
Let me thank the hon Dubazana and Luyenge for their contributions to this debate, and thank all of the parties for their broad support for the kind of taxation direction that we are taking, and let me also belatedly recognise the presence of the Deputy President. Thank you very much. [Applause.]
Debate concluded.
Bill read a first time (Inkatha Freedom Party dissenting).