Faizel Patel, Radio Islam News – 22-02-2018
Finance Minister Malusi Gigaba has increased the Value Added Tax (Vat) by one percentage point from 14% to 15% as part of what he called a “tough but hopeful” Budget.
This is the first time South Africans will be paying a higher rate of Vat for the first time since in 25 years.
Gigaba was presenting his first budget speech on Wednesday in Parliament after he was appointed by former president Jacob Zuma to replace Pravin Gordhan in a midnight Cabinet reshuffle in March last year.
Gigaba says Vat has not been adjusted since 1993, and it is low compared to some other countries.
“We therefore decided that increasing Vat was unavoidable if we are to maintain the integrity of our public finances.”
Gigaba says the VAT increase will raise the cost of living for all households and raise R22.9-billion for the fiscus.
While the VAT increase to 15% is expected to send shockwaves there is a small reprieve for poorer households.
“The current zero-rating of basic food items such as maize meal, brown bread, dried beans and rice will limit the impact on the poorest households.”
In addition to Vat, Gigaba has also announced an increase in excise duties on luxury goods and estate duty on wealthy individuals.
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