The Minister of Finance, Malusi Gigaba’s, 2018 Budget hammers the poor and is a legacy of Jacob Zuma’s disastrous management of the economy of South Africa. Instead of stabilising the national debt levels, they will continue to rise to R 3.3 trillion over the next three years and debt service costs will amount to R 592 billion over the medium term.
The once-off provisional allocation of R6 billion to drought relief is symptomatic of the short-term planning by National Government which
lead to the current water crisis in the first place.
~ Alf Lees, Democratic Alliance, Deputy Shadow Minister of Finance
READ THE 2018 BUDGET SPEECH HERE
The consolidated deficit is projected to narrow from
4.3% of GDP in 2017/18 to 3.5% in 2020/21.
Government will spend R57 billion on free higher education over the
next three years, Finance Minister Malusi Gigaba said on Wednesday.
As part of wide-ranging tax proposals, the Minister said the measures were being introduced to generate an additional R36 billion in tax revenue for 2018/19.
The main tax proposals for the 2018 Budget are:
- 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 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;
- 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%.
Tabling the 2018 Budget Speech in the National Assembly on Wednesday, the Minister said increasing VAT was unavoidable, as there was a need to maintain the integrity of public finances.
“In developing these tax proposals, government reviewed the potential contributions from the three major tax instruments, which raise over 80% of our revenue – personal and corporate income tax and VAT.
“We have increased personal income tax significantly in recent years, particularly at the higher income bands, and our corporate tax is high by international standards.
“We have not adjusted VAT since 1993, and it is low compared to some of our peers. We therefore decided that increasing VAT was unavoidable if we are to maintain the integrity of our public finances,” he said