- Malusi Gigaba's budget speech is full of hope but does not make it easy for South Africans
- VAT hikes as well as a fuel levy increase will hit the rich and the poor but the poor will feel it far more
- Social grants will see an increase as well as free higher education becoming a reality
Finance Minister Malusi Gigaba delivered his budget speech in the shadow of President Cyril Ramaphosa's State of the Nation Address. The SONA had filled many South Africans with hope for a better tomorrow. Gigaba's speech brought us back to reality.
Briefly.co.za learned that Gigaba's plan for 2018 includes a VAT hike, higher sin taxes and a fuel levy increase. His budget plans to reignite a stagnating economy and hopes to increase tax revenue by R36-billion and slash government spending by R87-million according to ewn.co.za.
The rate hike is specifically targeted to partially fund free education for low-income students.
The big picture
GDP growth is expected to rise to one percent from the 0.7% predicted in October. The economy is expected to grow 1.5% for 2018 and increase to 2.1% by 2020.
Vat is set to increase by one percentage point to 15%, the first such adjustment since 1993. A fuel levy and sin tax hike would produce R2.6-billion. The general fuel levy total will be R3.62 per litre.
The fuel levy would increase the price of fuel by 52c per litre form 4 April 2018. An eco-awareness drive will see tax hikes for plastic bags, motor vehicle emissions and incandescent light bulbs.
A health promotion levy will tax sugary beverages which would be implemented from 1 April 2018.
Alcoholic drinks will increase between six to ten percent and tobacco will increase by 8.5%.
The social grant payouts will see an increase:
• State old age grant from R1 600/month to R1 695.
• State old age grant, over 75’s from R1 621 to R1 715
• War veterans grant from R1 620 to R1 715
• Disability grant from R 1 600 to R1 695
• Foster care grant from R920 to R960
• Care dependency grant from R1 600 tot R1 695
• Child support grant from R380 to R405.
R4.2-billion will be allocated for national health insurance funded through adjustments to the medical tax credit.
The Department of Public Works conducted an audit which revealed that the government owns 195 000 properties with an estimated value of R40-billion. Gigaba said that the government will develop a programme to make better use of the properties or sell them off in the short to medium term.
This would produce additional funding to help SOE's which are floundering.
The budget allocated R57-billion in the medium term to fund free higher education for students who's families earn less than R350 000 per yer.
The budget speech by Gigaba has brought reality crashing down after the recent euphoria experienced when Cyril Ramaphosa was elected.
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