Reading Time: 4 minutes

2018 Budget Speech Highlights

Finance Minister Malusi Gigaba gave his budget speech on Wednesday 21st of February and announced many big changes to the annual budget. Some of these include an increase in VAT, higher fuel levy and little in the way of personal tax relief.

Faced with a huge income deficit and the need to pay for money already loaned government are having to cut spending and hike income in what the Minister described as a tough budget.



How Do You Earn More?

If you need more money then maybe you need to earn more. So, how does the government earn more from its citizens and foreign investors without chasing away investment or turning the population against them? Here are some of the measures being taken this year:



In the biggest announcement of the speech and as has been speculated will happen, after 25 years at 14% VAT will now increase to 15%.

VAT will now increase to 15%

Sins Tax

A bottle of spirits will now cost R4.80 more as sins tax was pushed up. Wine will cost an extra 22.5C per 750ml and cigarettes will go up R1.22/ pack.


Sugar Tax

The much-debated sugar tax will kick in from April this year. Add to that an extra 12 cents for the plastic bag you take your sugary goods home in.

Personal Tax

Those in the lowest 3 tax brackets will see some relief while everyone else will see lower than hoped for relief. The highest income brackets saw no increased relief from last year meaning they will essentially be paying more.

Medical aid related tax breaks are also getting hit. Meaning that those with private medical aid will ultimately be paying more for them.

Fuel Levy

A massive 52 cents hike in the fuel levy will be felt by consumers as the fuel levy is bumped up dramatically this year.

Another way that Government will be looking to earn extra income this year is by considering which of its assets can be sold including properties etc.



So, what do you do once you have all those Billions and Billions of Rands? You have to spend them. This year government will look to slash its spending dramatically while still trying to incentive small businesses and growth in the cities and townships.



We all know that when you work out your budget, you have to set aside funds for the people you owe money to. Government also has to do this. The ultimate goal is to eventually begin to reduce the debt (obviously). That won’t be happening for now as income has as yet to meet expenditure. For now, around 10% of what is brought in in taxes will be spent on servicing the countries existing debt (which will grow by a few percent).

#Fees Must Fall

Working toward the goal of free higher education an allocation of R57 Billion has been set aside over the next 3 years to help students from families with less than R350 000 annual household income enter tertiary schooling for their first year. R12.4 Billion will be allocated to this project this year. Students with NSFAS loans will have these loans converted into bursaries.

Social Grants

As a response to help those most vulnerable due to the increase to VAT, there will be a slightly higher than normal increase in government grants. For example, the old age grant will now be R1690/month (up by R90). Child support grants will go up to R400/month as of April 2018.

Also, efforts will be taken to ensure everyone gets their grants without interruption.


Government is setting aside R6 Billion to help drought-stricken provinces and cities deal with the effects of the drought. Also due to foreseen losses of jobs in the agricultural industry additional jobs on the working on water projects are being made available.

Spend Your Money and Pay On Time

A commitment is being made (including penalties for failure) to government departments and provincial government paying for services on time. There will also continue to be a focus by National government to helping local/Provincial government and municipalities make better use of their funds and to stick to their own budgets.

Now What?

The Rand strengthened on the back of this earn more, spend less budget. Thought it is not being described as a ‘feel good’ budget it is perhaps a more realistic one, that may further build international (read investors) confidence and encourage ratings agencies to consider reversing some of their past downgrades or at least hold off from further downgrades while they keep an eye on how things go over the next few months.

Consumers should prepare for some nasty surprises as the VAT and fuel levy hikes hit home at till points over the next few months. Things are going to cost more. If you find you are struggling to make ends meet each month and still pay back those who you owe money to even after trying to earn more and spend less then perhaps you should talk to a Debt Counsellor for some practical advice? You can find a list of Debt Counsellors who offer debt review in the back of each issue of Debtfree magazine which is available for free (no price hikes here).