By now you have been bombarded with Budget feedback, so we need not go into the details. The most talked-about item is that VAT will increase from 14% to 15%. This had to happen and like it or not, it will kick in on 1 April 2018. As far as the rest of the announcements are concerned, not much new. Unless you have an estate worth more than R30 million or want to donate more than that, tax rates stay the same. Personal, company and trust tax rates stay the same. Only the lowest three tax brackets have been adjusted to counter inflation. Investment companies and pension funds may invest more of your money offshore, which is a good thing. You will pay more for fuel, alcohol, luxury items and tobacco. Dividend tax and capital gains tax stay the same. Unfortunately, we still need a substantial amount of state revenue to pay for our government debt and to fund our budget deficit.
The debt issues were, however, addressed in the Budget in a bid to stave off a final ratings downgrade which would also see the rand weakening substantially. Currently the rand is strong and hopes are high. As a country, the only solution to our longer-term problems is better growth. We have to convince companies to employ more people and make more fixed investments. We have to get rid of corruption at our SOEs and stop funding those that are terminally ill. We have to cut down on a lazy and bloated government and make them lean and mean. We have to incentivize increased productivity and punish freeloaders.
Mr. Ramaphosa will have to show us that he means business, otherwise we will once again be overcome by the gloom and doom of knowing it was all bark and no bite. And then we still have the issues of land, nuclear energy, and free education. Rome was not built in a day and after the devastation of the Zuma era we need to realize that we have to start building from the foundations up again. We have to be a little bit patient.
