Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      Public money, private plans: MPs demand Post Office transparency

      13 June 2025

      Coal to cash: South Africa gets major boost for energy shift

      13 June 2025

      China is behind in AI chips – but for how much longer?

      13 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025

      10 red flags for Apple investors

      13 June 2025
    • World

      Yahoo tries to make its mail service relevant again

      13 June 2025

      Qualcomm shows off new chip for AI smart glasses

      11 June 2025

      Trump tariffs to dim 2025 smartphone shipments

      4 June 2025

      Shrimp Jesus and the AI ad invasion

      4 June 2025

      Apple slams EU rules as ‘flawed and costly’ in major legal pushback

      2 June 2025
    • In-depth

      Grok promised bias-free chat. Then came the edits

      2 June 2025

      Digital fortress: We go inside JB5, Teraco’s giant new AI-ready data centre

      30 May 2025

      Sam Altman and Jony Ive’s big bet to out-Apple Apple

      22 May 2025

      South Africa unveils big state digital reform programme

      12 May 2025

      Is this the end of Google Search as we know it?

      12 May 2025
    • TCS

      TechCentral Nexus S0E1: Starlink, BEE and a new leader at Vodacom

      8 June 2025

      TCS+ | The future of mobile money, with MTN’s Kagiso Mothibi

      6 June 2025

      TCS+ | AI is more than hype: Workday execs unpack real human impact

      4 June 2025

      TCS | Sentiv, and the story behind the buyout of Altron Nexus

      3 June 2025

      TCS | Signal restored: Unpacking the Blue Label and Cell C turnaround

      28 May 2025
    • Opinion

      Beyond the box: why IT distribution depends on real partnerships

      2 June 2025

      South Africa’s next crisis? Being offline in an AI-driven world

      2 June 2025

      Digital giants boost South African news media – and get blamed for it

      29 May 2025

      Solar panic? The truth about SSEG, fines and municipal rules

      14 April 2025

      Data protection must be crypto industry’s top priority

      9 April 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Current affairs » Taxes hiked as Gigaba targets debt

    Taxes hiked as Gigaba targets debt

    By Agency Staff21 February 2018
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp
    Malusi Gigaba (image c/o GCIS)

    The ANC took a political gamble by increasing sales tax ahead of elections next year as new President Cyril Ramaphosa seeks to stabilise debt and prevent a third junk credit rating.

    The value-added tax rate will be raised to 15% from 14%, the first time since the end of apartheid that the government has targeted a charge seen as hitting the poor hardest.

    Levies on fuel and luxury goods will go up, while spending will be pared back over the next three years, according to finance minister Malusi Gigaba. The rand and government bonds gained.

    These fiscal proposals will cause economic discomfort but they are necessary to protect the integrity of the public finances

    “These fiscal proposals will cause economic discomfort but they are necessary to protect the integrity of the public finances,’’ he said in his budget speech to parliament in Cape Town on Wednesday. “We dare not borrow irresponsibly, leaving it to future generations to repay.’’

    The first increase in the sales tax since 1993 comes just over a year before national elections and could backfire on the ANC because it will be seen to be hitting its largely poor and middle-class supporters. The ruling party may be banking on stronger growth this year boosting income, allowing it to provide relief and placate voters in next year’s budget.

    Labour unions that backed Ramaphosa’s campaign to win control of the ANC in December vigorously opposed a VAT increase, arguing that the government should target wasteful spending instead. Ramaphosa was elected president last week, a day after his party forced Jacob Zuma to quit following a scandal-marred nine-year tenure during which economic growth stagnated.

    “We are in desperate times, so it really required some exceptional measures,’’ said Ismail Momoniat, the Treasury’s head of tax policy. “It was clear that VAT was the least worst.’’

    Higher taxes will raise an additional R36bn in the year to March 2019 and be coupled with budget cuts totaling R85bn over three years. National treasury expects those measures, together with an improved economic growth outlook, to narrow the budget deficit to 3.6% of GDP in the coming fiscal year, from 4.3% now.Forecasts in October that projected gross debt ballooning to more than 60% of GDP were pared back. That may appease rating companies that have steadily downgraded the nation and help ward off a cut to junk next month by Moody’s Investors Service.

    Watch the budget speech in full:

    Moody’s is the only major company that still ranks South Africa’s debt at investment grade after S&P Global Ratings and Fitch Ratings punished the country in 2017 following political changes that sapped confidence and knocked financial markets.

    Benchmark bond yields fell 12 basis points to 7.98%, dropping below 8% for the first time since May 2015, while the rand gained 0.7% to R11.65/US$ by 2.38pm in Johannesburg, the best performer among major peers on Wednesday.

    Better sentiment since Ramaphosa took over leadership of the ruling party, and the government, is expected to help lift economic growth. The treasury forecasts a 1.5% expansion this year, up from the October forecast of 1.1%.

    First and last

    The annual budget speech could be Gigaba’s first and last with Ramaphosa widely expected to replace him and several other Zuma appointees in a cabinet reshuffle.

    “The president ultimately has the prerogative over this issue,’’ Gigaba told reporters before his speech. “We will support him fully.’’

    The budget allocates an additional R57bn over the next three years to finance a plan announced by Zuma late last year to fund free post-school education for poor students. There was also an extra R6bn for drought relief and another R4.2bn for a national health insurance plan.

    The budget didn’t promise any additional funding for cash-strapped state-owned companies, although provisions could still be made and financed by selling about R40bn worth of state properties.

    “Any spending on state-owned companies will have to be done in a budget-neutral way,’’ Gigaba said. “We will have to find resources, probably through the sale of state assets.’’  — Reported by Mike Cohen and Arabile Gumede, with assistance from Robert Brand, Ana Monteiro and Sam Mkokeli, (c) 2018 Bloomberg LP



    Cyril Ramaphosa Jacob Zuma Malusi Gigaba
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleSouth Africa’s inflation rate slows to 4.4%
    Next Article VAT hiked to 15%

    Related Posts

    Telecoms operators back BEE reforms – but warn against favouritism

    5 June 2025

    Starlink storm: BEE reforms fuel tensions in Ramaphosa’s GNU

    26 May 2025

    Sita says it welcomes SIU corruption probe

    26 May 2025
    Company News

    Huawei Watch Fit 4 Series: smarter sensors, sharper design, stronger performance

    13 June 2025

    Change Logic and BankservAfrica set new benchmark with PayShap roll-out

    13 June 2025

    SAPHILA 2025 – transcending with purpose, connection and AI-powered vision

    13 June 2025
    Opinion

    Beyond the box: why IT distribution depends on real partnerships

    2 June 2025

    South Africa’s next crisis? Being offline in an AI-driven world

    2 June 2025

    Digital giants boost South African news media – and get blamed for it

    29 May 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.