Despite a slightly lower revenue shortfall compared with the R50.8bn estimated at the medium-term budget policy statement, the shortfall remains large at R48.2bn. A significant portion of the shortfall is attributed to lower personal income tax collection. The unexpected announcement of fee-free education, which will cost the state about R56bn over the medium term, together with a rising debt-to-GDP ratio of 53.3%, left the Treasury with very little choice but to cut expenditure and increase taxes, including value-added tax (VAT). The main taxes include a one percentage point increase in VAT to 15%, effective on April 1. Of the R36bn that the Treasury hopes to raise through taxes to reduce the budget deficit and fund fee-free higher education, R22.9bn will come from the increase in VAT. Other increases include a jump in the general fuel levy of about 22c/l and a 30c/l rise in the Road Accident Fund levy, an increase in excise duties for luxury goods, a rise in estate duty to be levi...

BL Premium

This article is reserved for our subscribers.

A subscription helps you enjoy the best of our business content every day along with benefits such as exclusive Financial Times articles, Morningstar financial data, and digital access to the Sunday Times and Times Select.

Already subscribed? Simply sign in below.



Questions or problems? Email helpdesk@businesslive.co.za or call 0860 52 52 00.