2018 Budget Speech: What it means for the property sector
Arguing that increases in tax, fuel levies and other sources of public funding are necessary for the integrity of the Treasury and to recover a revenue deficit of R48.2bn, Gigaba also announced his plan to fund free higher education and training. While a lot was said and many figures were thrown around, what impact will his speech have on the property market?
Firstly, his plan to increase VAT by one percentage point was met by protest from certain sectors of Parliament. Gigaba stated that this will be the first VAT increase for South Africans in the last 25 years, and assured that poorer communities will be unaffected by this. This increase will raise R22.9bn for the Treasury.
Secondly, he proposed an increase in estate duty that will see a 25% tax on any property over the value of R30m. To avoid the staggering of payments on houses (in the hopes to avoid this estate duty), Gigaba announced that any payments totaling R30m or more in a single financial year will attract a 25% tax on the total amount. Therefore, high-end properties will be affected from next month onwards.
Summary of proposed tax increases
Treasury’s tax hikes, as outlined in Gigaba’s speech, will generate about R36bn in tax revenue over the next financial year. Some of his proposals include:
- Vat to increase from 14% to 15%
- Personal income tax rebates and brackets will increase below inflation.
- Increased estate duty from 1 March 2018. For properties more than R30m, a 25% tax will be introduced - that is to say that any payments over R30m in one tax year will be taxed at 25%.
- Ad valorem excise duty on luxury good will increase from 7% to 9%. From 1 April 2018, the maximum ad valorem excise duty for vehicles will increase from 25% to 30%. Smartphones will be classified as luxury goods.
- A 52 cent per litre increase in fuel levies, comprising a 22c/l general fuel levy and a 30c/l Road Accident Fund levy.
- Alcohol & tobacco excise duties will increase from 6% to 10%.
- Plastic bag levy will increase by 50% to 12 cents per bag, effective from 1 April 2018.
- The Carbon Tax Bill is being pushed for approval before the end of 2018. Carbon Tax will be implemented from 1 January 2019.
- From 1 April 2018, environmental levy on incandescent light bulbs will increase from R6 to R8.
- Zero-rating of basic food items such as maize meal, beans and bread (white, brown and whole wheat only).
Among many other policy changes and reviews in his speech, Gigaba told Parliament that his proposals should stave off any further rating downgrades.
____
Kerzner-branded luxury estate in Cape Town
____
Enjoy quality time with your family at Kirstenbosch Craft and Food Market on the last Sunday of every month.
____
With over half a century of expertise buying and selling properties, we understand it is more than just a transaction - this is your story - and we are honoured to write this chapter with you. Allow us to provide you with our expert knowledge on the Observatory, Salt River, Woodstock. Mowbray area, ensuring you have the most accurate information and support when buying or selling your property. Contact us on +27(0)21 423 9146. We are here to ensure that you prosper through property!
____
Make sure to follow us on Facebook and Google+ for the latest tips and trends in the property industry, as well as some of the most relevant news about the area you call home. Follow us on Instagram to view some of the gorgeous images of real estate we have on offer and to share some of your own. We are excited to be a part of your story.
Picture: Ashraf Hendricks/GroundUP
21 Feb 2018
Author Seeff