VAT hike
Arguably the biggest of these is the increase in the effective VAT RATE, which will rise from 14% to 15% adding approximately R22.9 billion to the fiscus.
Bruce Fleming, a financial planner with Old Mutual Private Wealth Management said that the increase was a tough political decision – but said it was important to remember that it is the first such adjustment since 1993 and was therefore overdue.
However, Fleming warned that all households will feel the pinch of the increase, and while zero-rated food items will take some of the increased burden off the poor, there has been no further developments as to whether more items will be added to the basket or even if additional items will be introduced at all.
FUEL levy
Commuters are expected to feel additional pain from 4 April with an increase in the fuel levy although this increase could be slightly offset by a stronger rand and lower oil prices.
From this date the fuel levy will be increased by 52c per litre on 4 April, pushing up the general fuel levy to R3.62 per litre of petrol, after a hike of 30c per litre last year.
“This is quite significant as it will place an extra burden on all road users especially on those who mostly rely on public transport and will ultimately have an effect on inflation,” said Fleming.
SIN taxes
As expected there was another increase in sin taxes and South Africans will pay between 6% and 10% more for alcohol, while smokers will be paying 8.5% more to sustain their habit.
Fleming said that this is expected to bring in an additional R1.33 billion in revenue in the 2018/19 financial year.
However, the increase in South Africa’s sin taxes are also particularly notable this year, given the recent push towards further legislating both alcohol and smoking regulations.
This means that we could see both a ban on public smoking and an increased drinking age (from 18 to 21) by the next budget speech.
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