Cape Town- Finance Minister Malusi Gigaba give his much anticipated budget speech on Wednesday and said, “this is a tough but hopeful budget.”
Here is what you need to know:
VAT will increase from 14% to 15%, is expected to bring in R22.9bn in additional revenue for the SA fiscus.
In his speech he said, “We have not adjusted VAT since 1993 and it is low compared to our peers,”
“We therefore decided that increasing VAT was unavoidable if we are to maintain the integrity of our public finances.”
Gigaba announced that an additional R36bn of tax will be generated this year.
Citizens will be paying more for the fuel levy, sugary drinks and estate duty but personal income tax was not increased.
Free education is now possible, Gigaba announced that allocation for a phase-in period of fee-free higher education would amount to R57bn over the next three years, of which R12.4bn will go towards needy first-year students in 2018/19, it will only qualify to students with a household income below R350 000 per annum.
Spending should be cut by R85bn over the next three years.
Debt must decrease, “We dare not borrow irresponsibly, leaving it to future generations to repay,” he said.
Consolidated budget deficit is projected shriek from 4.3% of GDP in 2017/18 to 3.5% in 2020/21.
Gigaba is hoping that higher tax revenues will comfort rating agencies who are hoping for a better economic performance in South Africa.
Photo Credit- The Citizen