The Budget Speech has come and gone and it is time to make sure that you’re up to date with the latest tax requirements.
Finance Minister Malusi Gigaba’s Budget Speech presented on the 21 February 2018 has seen him make “difficult decisions” to address a revenue shortfall and to fund free higher education.
An increase in value-added tax (VAT), fuel levy and a higher estate duty tax are just some of the things South Africans will be faced with this year.
On the other hand, Minister Gigaba announced some relief for the poor and the working class in the form of below inflation increase in personal income tax, while ensuring an above average increase in social grants.
As part of wide-ranging tax proposals, the Minister said the measures were being introduced, in the main, to generate an additional R36 billion in tax revenue for 2018/19.
The main tax proposals for the 2018 Budget are:
An increase in the value-added tax (VAT) rate from 14% to 15%, effective 1 April 2018;
A below inflation increase in the personal income tax rebates and brackets, with greater relief for those in the lower income tax brackets;
An increase in the ad-valorem excise duty rate on luxury goods from 7% to 9%;
A higher estate duty tax rate of 25% for estates greater than R30 million in value;
A 52 cents per litre increase in the levies on fuel, made up of a 22 cents per litre for the general fuel levy and a 30 cents per litre increase in the Road Accident Fund Levy, and
Increases in the alcohol and tobacco excise duties of between 6 and 10%.
Tabling the 2018 Budget Speech in the National Assembly on Wednesday, the Minister said increasing VAT was unavoidable, as there was a need to maintain the integrity of public finances.
“In developing these tax proposals, government reviewed the potential contributions from the three major tax instruments, which raise over 80% of our revenue – personal and corporate income tax and VAT.
“We have increased personal income tax significantly in recent years, particularly at the higher income bands, and our corporate tax is high by international standards.
“We have not adjusted VAT since 1993, and it is low compared to some of our peers. We therefore decided that increasing VAT was unavoidable if we are to maintain the integrity of our public finances,” he said.
What the tax proposals mean for 2018/ 19 financial year
In December, former President Jacob Zuma announced that from this year, government would implement fee-free higher education in a phased approach.