The 2018 budget speech was delivered on 21 February 2018 by then Finance Minister Malusi Gigaba, who described it as “a tough, but hopeful budget”. With the government looking to raise an additional R36bn in taxes for 2018/2019, this is how it will affect ordinary South African citizens.
1. VAT INCREASE
Value-added tax (VAT) will increase from 14% to 15% from 1 April 2018. While this is the first rise in the VAT rate since 1993, it is still lower than African and global averages. There are 19 foodstuffs that will be excluded including samp, maize meal, dried beans, brown bread and rice.
2. INCOME BRACKETS
The bottom three personal income brackets will be partially adjusted with rebates for inflation, while the top four brackets remain unchanged, leaving higher income earners to bear the brunt of the increases.
3. FUEL LEVIES
It will soon cost you more to fill up your vehicle with fuel. The general fuel levy will increase by 22 cents and the Road Accident Fund levy by 30 cents. The increase will take effect on 4 April 2018 and is expected to add R1.22bn to government revenue.
4. SIN TAXES
ENCA reports an increase in the following tobacco and alcohol taxes: • Cigarettes - R1.22 per pack of 20 • Cigarette tobacco - R1.37 per 50g • Pipe tobacco - 39c per 25g • Cigars - R6.45 per 23g • Malt beer - 15c per 340ml can • Unfortified wine - 23c per 750ml bottle • Fortified wine - 28c per 750ml bottle • Sparkling wine - 73c per 750ml bottle • Ciders and alcoholic fruit beverages - 15c per 340ml bottle • Spirits - R4.80 per 750ml bottle
5. ENVIRONMENTAL TAXES
Expect to pay 12 cents more for plastic bags from 1 April, while there is an increase of R2 on incandescent light bulbs.
6. MEDICAL TAX CREDITS
These will increase by 2.3% per month for the first two beneficiaries (from R303 to R310), and 2.5% per month for the remaining beneficiaries (from R204 to R209).
7. LUXURY GOODS TAX
Expect an increase in the ad-valorem excise duty rate on luxury goods from 7% to 9%. Luxury items that fall into this category include smart phones, electronics, cosmetics and golf balls.
8. ESTATE DUTY TAX
From 1 March 2018, there will be an increase from 20% to 25%, for estates greater than R30 million in value. This is a summary of some of the main budget talking points, you can also read the complete 2018 budget speech.
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