Gigaba raises Value-Added Tax to 15%

Gigaba raises Value-Added Tax to 15%

Gigaba raises Value-Added Tax to 15%

Finance minister Malusi Gigaba announced at today's 2018 Budget Speech that the government will set aside R2.1-billion for startups.

"Firstly, new tax measures raise an additional R36 billion in 2018/19, mainly through a higher VAT rate and below-inflation adjustments to personal income tax brackets".

The Public Servants Association, which represents hundreds of thousands of public-sector employees said it was concerned about the detrimental, ripple effect on especially middle- and low-income earners of the Value-Added Tax increase and a 52-cents increase on the fuel levy.

These would include a continuation of the current zero-rating of basic food items such as maize meal, brown bread, dried beans and rice.

"Government proposes to increase these rates, which are already applied to some goods that are consumed mainly by wealthier households (such as cosmetics, electronics and golf balls)", the review said.

"Gugaba has this tainted history and the problem with him delivering the budget is that people know that he has been involved so intimately (with alleged corruption) and can not signal to worldwide markets a credible turnaround", said Georg. The R85-billion reduction in government expenditure over the next three years is funded by cuts at national level of R53-billion, but also reductions in the transfers to provinces and local government, R5.2-billion and R3.2-billion respectively.

"This is a tough, but hopeful budget", Gigaba said, as reported by Reuters.

The budget deficit is expected to narrow to 3.5 percent of gross domestic product (GDP) by 2020 from 4.3 percent in the 2017/18 fiscal year, while gross debt is seen narrowing to 56 percent of GDP in the 2020/21 fiscal year from almost 60 percent seen in the October mid-term budget statement.

Although the economic growth outlook has improved, growth remains elusive and GDP is only expected to expand by 1.5% in 2018, compared to treasury's earlier projection of 1.1%. Alcoholic beverages and cigarettes also receive a tax increase. "With the state of affairs in our country, high unemployment and inequality, too many people depend on incomes of individuals to survive", the EFF said.

Gigaba said NSFAS funding for returning students would be converted into bursaries. And Gigaba has made undertakings with regards to a "dialogue on mining policy" - the Chamber of Mines' legal challenge to the mining charter was put on hold for now after a meeting with Ramaphosa - and greater governance and financial management accountability by State-owned Entities (SOEs) like Eskom.

Latest News