MONEY MATTERS
8 1 0 2 H C E E P S T E G BUD ch The big number crun
T
he then finance minister Malusi Gigaba delivered his inaugural budget speech amid a tough economic climate, which saw him make difficult decisions to address a massive revenue shortfall of R48.2-billion and the funding of free higher education.
The main tax proposals for the 2018 Budget were: • An increase in the value-added tax (VAT) rate from 14% to 15%, effective 1 April 2018; • A below-inflation increase in the personal income tax rebates and brackets, with greater relief for those in the lower income tax brackets; • An increase in the ad-valorem (in proportion to the estimated value of the goods or transaction concerned) excise duty rate on luxury goods from 7% to 9%; • A higher estate duty tax rate of 25% for estates greater than R30-million in value; 28
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• A 52 cents per litre increase in the levies on fuel, made up of a 22 cents per litre for the general fuel levy and a 30 cents per litre increase in the Road Accident Fund Levy, and • Increases in the alcohol and tobacco excise duties of between 6 and 10%. Most surprising of all was the increase in value-added tax (VAT) — which has remained the same since 1993 — to 15%. Thankfully, vulnerable households were protected from this increase through compensation of an above-average increase in social grants. Another big change was the introduction of the health promotion levy, or so called “sugar tax”, which is an effort by government to control the high obesity rate in the country. Basically, it will tax all sugary drinks in an effort to encourage healthier choices among South Africans. Broken down, we will be paying an extra 41 cents for a 330ml can of our favourite cooldrink.
