Guiding consumers since 2009

‘Stealth taxes’ to be carried by consumers

By Isabelle Coetzee

New tax measures, predominantly aimed at consumers, will fund higher education and government debt, said finance minister, Malusi Gigaba, during his budget speech yesterday afternoon.

These measures, which will raise approximately R36 billion in 2018, most notably includes an increase in Value Added Tax (VAT) from 14% to 15% – the first increase since 1993.

“I am surprised that it was not a 2% increase,” said Peter Mansfield, retired local government leader and entrepreneur. “The government's cupboard is bare and it’s risking default on its debt.”

In his speech, Gigaba acknowledged that it was necessary to increase VAT in order to maintain the integrity of South Africa’s public finances.

He stated that, “Despite an improved outlook, government still faces a revenue gap of R48.2 billion in the current year.”

Comparing VAT to other countries

Mansfield believes VAT is the most efficient form of tax collection, not just in South Africa but in neighbouring countries, like Zimbabwe and Namibia, where higher VAT rates are already in place.

According to Tertius Troost, tax consultant at Mazars, this is how Treasury was able to justify the increase in the VAT rate.

“From the comparison to other countries we can see that the international average is around 19%, so there is still room for Treasury to manoeuvre,” said Troost. 

Consumers to carry tax burden

Although income tax has also been slightly adjusted, the majority of taxes will be collected from the increase in VAT, increases in the general fuel levy, and the introduction of the sugar tax and emissions taxes.

Mike Teuchert, national head of taxation at Mazars, refers to these taxes as ‘stealth taxes’ because, since they are built into the prices of goods, their full weight won’t be immediately evident to consumers.

“The stealth taxes will have a significant effect on consumers,” said Teuchert, who was also disappointed that the Budget did not include enough long-term solutions.

Gigaba explained at a press briefing that although these taxes are not ideal, South Africans need to look at the budget as a whole because it will lead to overall growth.

Teuchert disagreed and said, “The only way to stabilise South Africa’s budget is to increase jobs and actually grow the economy, and we are still not seeing enough of that.”

Recent Articles

Featured Lock down your finances

There are quite a few things that may influence your personal finances. These include an economic recession, losing your job, not receiving your full salary, your company closing, or even a state of disaster in your country, such as the current lockdown due to the Covid 19-outbreak. 

Ensure your family doesn’t feel the impact of your retrenchment

Retrenchment doesn’t only change the way you view yourself; it also alters the relationship between you and your family. Things can go from good to bad within a short space of time. But you can do something to prevent your family from feeling the impact of retrenchment.

Someone got injured on my property – now what?

Life is unpredictable and no matter how careful we are, accidents happen. But what if someone has an accident while visiting your house? Your guest could fall off the stairs, slip on the floor or get bitten by your dog. 

Are you ready for a house upgrade?

You moved into your home knowing one day you would need to make some changes to turn it into your dream home - add a new bedroom, a second bathroom, build a double storey or even move out.


Free large chips at KFC

Price: R119.80
When: Daily
Where: Online

Big family feast for R299 at Panarottis

Price: R299
When: Thursdays
Where: Nationwide

Spur Burger Combo for R249

Price: R249
When: Daily
Where: Nationwide

Latest Guide

Guide to debt rehabilitation solutions