NEWS
21/02/2018 13:56 SAST | Updated 21/02/2018 14:10 SAST

The Budget: What You Need To Know

It ain’t pretty folks. Former president Jacob Zuma and the state capture project will see us all cough up a little more in 2018.

South African finance minister Malusi Gigaba speaks to journalists at the World Economic Forum on Africa 2017 meeting in Durban. May 3, 2017.
Rogan Ward / Reuters
South African finance minister Malusi Gigaba speaks to journalists at the World Economic Forum on Africa 2017 meeting in Durban. May 3, 2017.

Finance minister Malusi Gigaba tabled his first Budget on Wednesday, and it was a tough one. There's a R48-billion hole in the country's finances that needs to be plugged, and apart from cutting costs in government, the only way to plug it is through higher taxation. This is HuffPost's rough guide to a rough budget:

  • VAT is going up from 14 percent to 15 percent;
  • Personal income tax will go up;
  • A fuel-levy increase of 52 cents;
  • Sin tax to rise between 6 percent and 10 percent;
  • GDP growth for 2017 revised upwards by 0.4 percent to 1 percent;
  • GDP growth for the coming year to speed up to 1.5 percent;
  • Government's finances have a shortfall of R48.2-billion;
  • New tax measures will raise an additional R36-billion;
  • Government spending cuts are targeting savings of R85-billion over three years;
  • Free higher education will cost R57-billion over the next three years;
  • Higher education is now the fastest-growing budget item, just ahead of debt-servicing costs;
  • R6-billion is set aside in the financial year to assist with drought management and upgrading of water-supply infrastructure.

Gift of the gab? Highlights from Gigaba's speech:

"There are risks and spending pressures we will need to navigate carefully, but this Budget presents a roadmap to maintaining the integrity of our public finances, while protecting social services."

"Government has demonstrated its resolve to confront allegations of state capture and corruption through the judicial commission of inquiry announced by former President Zuma, and the investigations being conducted by the Hawks, Asset Forfeiture Unit and other agencies."

"The year was characterised by slow economic growth, recession, ratings downgrades, and heightened concerns regarding the governance and sustainability of key state-owned companies."

"Tax morality is a crucial component of a healthy democracy. It has taken many years and lots of effort to build the foundation of trust that supports our tax morality. We have seen how quickly citizens' trust can be eroded by perceptions of poor public governance."

"Given the difficult circumstances we have been in and the choices we had to make in order to steer the course, maintain the trajectory of our policy objectives and sustain our public finances, we have made the tough calls and decisions that affirm our nationhood."

"Through this budget, we choose ourselves yet again; we do the things Madiba dared us to do at the advent of our democracy that would affirm humanity's conviction in the nobility of our course and its pride in our efforts and daily deeds."

"At this stage, I wish to thank former president Zuma for his leadership during the budget process. I wish to thank you, President Ramaphosa, for your leadership, counsel and commitment to unblocking obstacles to inclusive growth."