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  • Writer's pictureLisa Perry

The Boring Budget 2018

In a world of chaos, I found the budget to be refreshingly boring, which I suspect was welcomed by more people than would publicly admit it.

RMB Private Bank provide a neat summary of what came through the budget.

Gigaba’s speech included the following:

  • The budget deficit is projected to decrease from 4.3% in 2017/18 to 3.5% in 2020/21

  • It is expected that gross debt will rise to 56.0% of GDP in 2020/21

  • This year’s proposed tax measures will raise an additional R36 billion in 2018/19

What will you be paying more for?

  • VAT is for the first time in our democratic history being increased: from 14% to 15%, effective 1 April 2018

  • To promote eco-friendly choices, the plastic bag levy, car emissions tax and the levy on incandescent light bulbs will be increased

  • Sugary beverages will now be taxed under a new health promotion levy from 1 April 2018

  • The fuel levy has been increased by 52 cents/litre

  • Alcohol and tobacco excise duties will be increased between 6-10%

  • Estates worth more than R30 million will now be taxed at 25%

  • Any donation in excess of R30million in a tax year will be taxed at 25%

How will Government be providing financial support?

  • Social development spend has been increased the most, by 9.2% over the MTEF

  • Social grants will see R528.4 billion being spent over the MTEF

  • The child support grant will increase from the baseline of R380 to R400 on 1 April and then to R410 on 1 October 2018

  • The old age, disability and care dependency grants increase to R1 690 on 1 April and to R1 700 on 1 October 2018

  • Higher education and training is receiving R324 billion in total over the MTEF

  • Basic education, including infrastructure, learner and teacher support receives R792 billion

  • For various purposes, including helping with the challenges of the drought, a provisional budget of R6 billion has been set aside. This includes short term disaster relief grants to the value of R473 million in 2018/19

  • The HIV/AIDS and TB conditional grant receives R66.4 billion over the MTEF

  • Subsidised public housing receives R123.3 billion over the MTEF

Gigaba touched on the unsustainability of government’s financial support for state-owned companies and that there is a need for holistic reform. He said that some might need financial support from Government, but that they will also look into disposing of non-core assets and attracting strategic equity partners will be reconsidered.

All in all, a lot to consider and hats off to our Finance Minister for keeping calm under the pressures he is faced with.

By Mamello Matikinca,Chief Economist and Chantal Marx, Wealth and Investments, Research Analyst, RMB Private Bank

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