Yesterday Finance Minister Malusi Gigaba delivered his first Budget speech. The budget speech focused on the 2018 Budget review which included the Revenue Proposal, Division of revenue bill and estimates of national expenditure. The Budget 2018 charts are a path out of economic stagnation, anticipating a steady increase in economic growth which will create a path to prosperity for our people, and improve our nation’s finances over time.
- The 2017 GDP growth projection has been revised upward to 1 per cent, which is higher than the 0.7 per cent expected at the time of MTBPS last year. The National treasury is anticipating growth of 1.5 per cent in 2018, rising to 2.1 per cent in 2020.
- A fund with an allocation of R2.1 billion over the medium term is being developed between the Departments of Small Businesses, Science and Technology.
- The December 2017 announcement of fee-free higher education and training entails large new allocations over the medium term.
- The new tax measures raise an additional R 36 billion in 2018/19, mainly through a higher VAT rate and below-inflation adjustments to personal income tax brackets.
- Over the next three years, the spending framework includes:
Expenditure reductions approved by Cabinet amounting to R 85 billion.
An allocation of R 57 billion for fee-free higher education and training.This means all new first-year students with a family income below R350 000 per annum at universities and TVET colleges in the 2018 academic year will be funded for the full cost of study.
Additions to the contingency reserve amounting to R10 billion.
- The main tax proposals for the 2018 Budget are:
An increase in the value-added tax rate from 14 per cent to 15 per cent.
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 per cent to 9 per cent.
A higher estate duty tax rate of 25 per cent for estates greater than R30 million,
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.
Increases in the alcohol and tobacco excise duties of between 6 and 10 per cent.
- Government will be spending R792 billion on basic education, R668 billion on
health and R528 billion on social grants, over the medium term.
- Government has taken deliberate steps to adjust social grant values above inflation to at least partially cover for the proposed increase in VAT, therefore:
The Old age, disability and care dependency grants will increase on 1 April 2018 from the existing R1600 by R90 to R1690 and by a further R10 to R1700 on 1st October 2018.
The Child Support grant will increase from the baseline of R380 to R400 on 1 April and to R410 on 1 October. This is a 6.6% annual increase.
An additional R2.6 billion has been added since the MTBPS to social grants to enable these changes.
- The Department of Rural Development and Land reform, intends to accelerate the settlement of restitution claims with plans to finalise 2 851 claims at a budgeted amount of R10.8 billion. It has set aside R4.2 billion for the acquisition of about 291 000 hectares of strategically located land.
- To provide short term assistance, this budget includes disaster relief grants for provinces and municipalities worth R473 million in 2018/19. Other conditional grants can also be reprioritized to respond to disasters if necessary.
Read more on: www.treasury.gov.za