News Worms
News Worms

Talking Points From The Gigaba Budget

Talking Points From The Gigaba Budget

"We have increased personal income tax significantly in recent years, particularly at the higher income bands, and our corporate tax is high by worldwide standards", he said.

The VAT rate, now at 14 percent, has not been adjusted since 1993.

Any impact in the lower LSMs can be countered with support in the grants system and potentially zero-rating more basic needs on food items and other necessities.

"Considering this, the smaller increase was a reasonable decision", it said, adding that businesses and consumers would also feel the effect of an increased fuel levy.

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. "This means that all new first-year students with a family income below R350 000 a year at universities and technical and vocational education and training colleges in the 2018 academic year will be funded for the full cost of study", he highlighted.

The U.S. dollar fell against the South African rand on news of the Value-Added Tax hike, and was trading over 0.7 percent lower immediately after the news. The Budget Review document also lists reductions in at least some of the conditional grants - overall these will be cut by R28-billion, according to the Budget Review - like the human settlement development grant that is reduced by R7.2-billion.

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.

Growth rose to 0.9 percent last year from a paltry 0.3 percent the previous year.

For Gigaba, Wednesday's R1.67-trillion Budget for the 2018/19 financial year was juggling act to put the rands and cents to government's focus on renewal, confidence and collaborative partnerships. Returning students would have loans converted to non-repayable bursaries, said Gigaba: "This is an important step in breaking the cycle of poverty and confronting youth unemployment".

More alternatives in its view could have been instituting a land tax, particularly on unused land, and increasing property taxes, particularly on non-residents and those owning multiple homes.

The lowest earning 10% of the population spends 13.8% of their disposable income on these taxes compared to 12.6% of the highest earning 10.1%. "We are anticipating growth of 1.5% in 2018, rising to 2.1% in 2020", says Gigaba as he tabled the 2018 Budget in the National Assembly.


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