, ,

Budget 2018 – What You Need to Know

On Wednesday, the Minister of Finance, Malusi Gigaba delivered the much-anticipated and hotly debated Budget Speech for 2018.

While most of us were stuck at work, unable to listen to what the Minister had to say, there were some very important announcements that could change the way we do business and handle our finances.

Here are some of the most important points, curated by MoneyPenny.

The increase in VAT

One of the most prominent announcements was the increase in VAT from 14% to 15%. This will be the first increase in VAT since 1993 and will allow government to raise an estimated R36 Billion in the next financial year. R23 billion will be used to cover current government debt.

It remains to be seen what impact this will have on poor households. The government have retained their zero-rated VAT on basic items such as maize meal, brown bread and rice.

No Wealth Tax

There’s been a lot of talk surrounding the introduction of a wealth tax that will see wealthy people having to pay an annual tax on the sum of their assets.

This has not yet been introduced but there was an increase in the ad-valorem excise duty rate on luxury goods from 7% to 9%.

Estate duty also saw an increase from 20% to 25% for estates of R30 million or more.

Higher Fuel Levies

The fuel levy will increase by 22 cents per litre while the Road Accident Fund levy will increase by 30 cents a litre.

This means that no matter what mode of transport you use, you will end up paying more to get from one point to another.

This will certainly have a negative impact on the poor and could lead to changing in the way that we commute.

Free Education

After Jacob Zuma’s bombshell announcement that the government will provide free education to the poor, R57 billion has been set aside to make this happen over the course of the next three years.

First year students with a family income of less than R350 000 per annum at universities and TVET colleges will be funded for the full cost of study.” 

While the exact impact of these fiscal changes remains to be seen, we urge everyone to be very wary of their spending habits and encourage you to ensure that your tax affairs are in order.

For assistance with any accounting and tax related issues, please do not hesitate to contact us.