Finance Minister Malusi Gigaba delivered his maiden budget speech in Parliament after less than a year in the job, tabling some bold proposals to make up for a R48.2 billion shortfall in revenue collection and to fund, among others, free higher education for a bigger cohort of poor students at universities and technical and vocational education training colleges.
Gigaba announced that government would make no adjustment in the top four personal income tax brackets in a bid to support the progressivity of the South African tax system.
These were some of the highlights in the 2018 budget speech:
– On April 1, value-added tax (VAT) is set to increase by one percentage point from 14 to 15 percent.
– R6 bln has been set aside for coming financial year for drought relief in several provinces, including Western Cape which has been hit hard by water shortages.
– GDP growth for 2017 has been revised upwards from the 0.7 forecast in October to one percent.
– GDP growth for 2018 forecast at 1.5 percent, rising to 2.1 percent in 2020.
– Excise duties on tobacco products will increase by 8.5 percent and taxes on alcohol will go up by between 6 and 10 percent.
– The budgets of departments are set to be reduced by R85.7 billion over the medium term (next three financial years).
– R10 billion is to be added to the contingency reserve over the the next three years.
– SA will spend R57 billion on providing free higher education for an estimated 1.1 million students from low household incomes over the next three years.
– Gigaba remained firm that South Africa could not afford to embark on a nuclear power expansion programme, adding that for the moment the country’s new coal-powered stations provided adequate supply.
– On April 4, the general fuel levy to increase by 22 cents per litre.
– From April 1, the ad valorem excise duty on luxury goods will will rise from 7 percent to 9 percent. The pricier an item, the more tax you will pay.
– The ad valorem excise duty for passenger cars and light commerical vehicle would be increased from 25 to 30 percent.
– On April 4, the Road Accident Fund (RAF) levy to increase by 30 cents a litre.
– On April 1, Environmental taxes (plastic bags, incandescent light bulbs and vehicle emissions and tax on sugary beverages) are set to increase.
– On April 1, estate duties for the wealthy and excise duties on luxury goods is set to increase.
– On April 1, pensioners will see their grants increase from R1,600 to R1,690, and by another R10 by October 1.
– The child support grant will increase by R20 from R380 to R400, and by another R10 come October 1.
– National Health Insurance will receive an additional R4.2 billion from Treasury, funded through cutting medical tax credits. (via African News Agency)