VAT is to increase by one percentage point to 15% from April 1 this year, to raise R22.9bn more for the fiscus. This and other new tax measures announced by Finance Minister Malusi Gigaba in the 2018-19 budget tabled in Parliament Wednesday will raise an additional R36bn for the fiscus. At the same time R85.7bn has been slashed from government spending over the next three years in a bid to accelerate the drive to narrow the budget deficit and stabilise debt. Treasury believes that raising VAT “is less harmful to growth than raising other taxes”. Higher income earners earning more than R410,461 a year will be taking home less pay as no relief has been made for fiscal drag. Those earning below this amount will not be fully compensated for inflation either — though they will get some relief. The provisions on fiscal drag will generate R6.8bn more in tax revenue. Also announced were higher ad valorem taxes on luxury goods such as cosmetics, electronics, cellphones and motor vehicles (R1...
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