Budget 2018 extracts – first VAT hike in 25 years

The 2018 budget is in and here is how it will affect you.

National Treasury will raise R7-billion from the personal income tax system through lower-than-inflation increases to tax rebates and brackets.

While the rate of personal income tax will not change this year, some income tax brackets will be tweaked.

This means that some taxpayers will not fall into a higher tax bracket when their wages increase.

ALSO READ: #Budget2018 VAT increased to 15%

The top four income tax brackets meanwhile, which include those who earn R423 000 and more in taxable income per year, will not be adjusted for inflation.

As of 1 April VAT will increase to 15%, which is likely to be met by resistance from unions.

National Treasury expects the hike to raise R22.9-billion of the R36-billion in additional taxes it hopes to collect in 2018/19 to stabilise the country’s fiscal situation.

There will be no wealth tax, but there will be an increase in the ad-valorem excise duty rate on luxury goods from 7% to 9%, effective 1 April.

As of 1 March estate duty will increase from 20% to 25% for estates of R30-million or more.

As anticipated by industry experts, the fuel levy will increase by 22c/litre while the Road Accident Fund levy will increase by 30c/litre.

These changes will take effect on 4 April.

Medical tax credits have not been abolished, but will only increase from R303 to R310 per month (2.3%) for the first two beneficiaries and from R204 to R209 per month (2.5%) for the remaining beneficiaries.

And of course there will be an increase in ‘sin tax’.

Excise duties on tobacco products will increase by 8.5%, and between 6% and 10% on alcohol.

‘Government will phase in fee-free higher education and training to students from poor and working class families,’ said Finance Minister Malusi Gigaba.

According to Treasury, all new first-year students whose family income is below R350 000 per annum, will be funded for the full cost of study at universities and TVET colleges in the 2018 academic year.

This will be rolled out in subsequent years until all years of study are covered.

Returning NSFAS students at university will have their loans for 2018 onwards converted to a bursary.

• Source: Moneyweb

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