Gigaba raises Value-Added Tax to 15%

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Gigaba raises Value-Added Tax to 15%

THE Minister of Finance, Malusi Gigaba is now announcing the Budget for 2018/19.

The so-called sin tax on alcohol and tobacco also increased by between 6 and 10 percentage points. In response, government has made significant changes to the fiscal framework.

Another alternative could have been raising personal income tax (particularly on the highest earners); increasing corporate income tax; and instituting an annual net wealth tax.

Fiscal discipline would be maintained, Gigaba said as the mantra of taking "the tough decisions" for sustainability and growth became the thread through the 2018/19 Budget.

"In addition, vulnerable households will also be compensated through an above-average increase in social grants", he said.

It is hoped that the increase, coupled with adjustments to income tax brackets, will raise some 36 billion rand ($3 billion) for the public purse in 2018-19. In essence, the more South Africans pay for a vehicle the more tax they will pay.

"This call is based on the fact that Gigaba is a Gupta-stooge who was the engine of state capture under [former president] Jacob Zuma. Over the medium term, the growth outlook is higher than projected in last year's MTBPS", says Gigaba.

Reacting to the announcement, PwC Vat partner Lesley O'Connell said that while the increase would impact all consumers, it was the appropriate approach. The free tertiary education would be rolled out in the subsequent years to cover all years of study. 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".

He added that government would phase in fee-free higher education and training to students from poor and working-class families. 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 Public Servants Association, which represents hundreds of thousands of public-sector employees said it was concerned about the detrimental, ripple effect on especially middle- and low-income earners of the Value-Added Tax increase and a 52-cents increase on the fuel levy.

He also said Treasury "had to strike a balancing act" by dealing with the economy's problems rather than taking a populist, pro-growth programme to win the next election.

Asiyifuni i-nuclear, as Zuma once sarcastically said.

Asiyifuni uNclear, asiyifuni iNuclear. As it turns out, we really don't want a bloated, expensive nuclear programme when the country's energy needs can be met through cheaper, renewable means.

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