WATCH: VAT, fuel levy to increase

WEB_PHOTO_BUDGET_2018_RECORDED_2102.jpg

Despite speculation over his future,finance ministerMalusi Gigaba will deliver the budget speech in the National Assembly this afternoon.All eyes will be on whether Gigaba will increase taxes orVAT, and how free higher education will be funded.

Editor’s note: This livestream has ended. You may watch the recording above.

JOHANNESBURG - Finance Minister Malusi Gigaba Finance Minister announced increases in VAT and other taxes to generate an additional R36-billion this financial year.

Delivering his 2018 budget speech in Parliament on Wednesday, Gigaba said it was a tough but hopeful speech.

From 1 April the value-added tax (VAT) rate goes up to 15 percent from 14 percent and the fuel levy will rise by 52c a litre.

 

 

Gigaba said VAT had remained the same since 1993 and was low compared with "some of our peers, such as Argentina. We therefore decided that increasing VAT was unavoidable if we are to maintain the integrity of our public finances."

The current zero-rating of basic food items such as maize meal, brown bread, dried beans and rice would limit the impact of the VAT hike on the poorest households, he said.

Social grants are also to be increased from 1 April.

Personal income-tax rebates and brackets will be increased at a rate below inflation, with greater relief for those in the lower-income tax brackets.

The excise duty rate on luxury goods rises two percentage points to 9 percent, while a higher estate duty tax rate of 25 percent will be imposed on estates greater than R30-million.

So-called sin taxes, on alcohol and tobacco, will be increased by between 6 and 10 percentage points.

 

Although this is Gigaba&39;s first full-term budget speech, some commentators believe it will also be his last.

Gigaba’s position is not certain amid talk of an imminent cabinet reshuffle.

On Tuesday, President Cyril Ramaphosa told Parliament changes to the cabinet will not be done in haste.

 

 

"Changes of this nature must be well considered, they should not be made in haste. I know members want it to happen yesterday it will not happen yesterday...

"This review, which we expect to take a number of months, will be based on thorough analysis... the noisy ones on this side will also make your inputs...the views of stakeholders will be considered so South Africans understand the rationale for the decisions we are going to take in this regard," said President Cyril Ramaphosa.

For a link to Treasury&39;s budget tool, click here