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News & Press: Government

Budget Speech, What You Need to Know?

Thursday, 01 March 2018   (0 Comments)
Posted by: Ernest Roper
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Before then Finance Minister Malusi Gigaba delivered his budget speech in Parliament on 21 February 2018, South African citizens were well aware that extraordinary measures were required in order to stabilise the public finances and push back the widening budget deficit. R36 billion in additional taxes was required and there was much speculation, as to how this would be achieved and how it would impact on business and individual households. 

The budget speech aimed largely at individuals rather than business does impact on South Africans, in one way or another. 

The big talking point to come from it, was the one percentage point hike in the VAT rate from (14% to 15%) which is expected to contribute roughly R23 billion to the fiscus. While this will no doubt impact negatively on vulnerable households, the zero-rating on basic foodstuffs remains intact and an above average increase in social grants well help off-set it. 

Government intends to raise close to R7 billion through lower-than-inflation increases to personal income tax brackets and rebates. High-income earners will bear the brunt of these increases – while the bottom three personal income tax brackets as well as the primary, secondary and tertiary rebates will be partially adjusted for inflation through a 3.1% increase, the top four brackets will remain unchanged.

An increase in the ad-valorem excise duty rate on luxury goods from 7% to 9%, effective April 1 2018 was announced. These pertain to items such as cosmetics, electronics and golf balls which are considered to be luxury items. Estate duty has also increase from 20% to 25% for estates of R30 million or more. 

There is no change to capital gains, corporate or dividend taxes however the general fuel levy will increase by 22 cents per litre while the Road Accident Fund levy will rise by 30 cents per litre, effective 4 April. 

Medical tax credit saw a minor increase from R303 to R310 per month for the first two beneficiaries (2.3%), and from R204 to R209 per month (2.5%) for the remaining beneficiaries.

Government plans to introduce a reform programme for SOCs such as Eskom and SAA as they have a role to play in economic development. It was also announced that free higher education and training to students from poor and working-class families will be phased in.

For those who drink and smoke and have long thought about quitting, here is some additional motivation for you. It was announced that excise duties on tobacco products will increase by 8.5%, and those on alcohol between 6% and 10% so quit now and save yourself a fortune. 


Master Builders KwaZulu-Natal Finance Department

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