The budget speech and property valuation: What they mean for consumers
01/03/2018 Former finance minister Malusi Gigaba delivered his first and final budget speech and it was received with mixed emotions.
Just a day before that, the City of Johannesburg launched the 2018 Valuation Roll, which also left a bitter taste in the mouths of property-owners.
With these latest adjustments many consumers are trying to understand what this means for them.
A brief look at the 2018 Budget
For months economists, analysts and Gigaba himself have warned consumers to brace themselves for a tough ride.
The national treasury’s goal of increasing state revenue and reducing expenditure/borrowing was expected to present big financial hurdles for everyone. The announcements made during the budget speech didn't disappoint.
Just in case you missed it, here’s a snapshot of the top announcements:
Picture: @ResolverSa twitter
One of the major changes was the increase in VAT, which hadn’t been adjusted for the last 25 years. The increase came as shock for many consumers despite analysts having hinted at a possible hike.
Although the impact of the hike may be limited by exemptions and the zero-rating of basic goods, the prices of other non-food items in the average consumer basket will still be affected.
The steep increase in fuel levies will undoubtedly lead to fuel, taxi, bus and train price hikes, yet another blow to the working class.
Also part of the set of tax increases are sugar and sin taxes which have and will continue to drive up the prices of products like sugary drinks, alcohol and tobacco.
All taxes will be effective from April 2018.
The 2018 General Property Valuation is also likely to have homeowners reaching deeper into their pockets
The purpose of the valuation is to update the market value of your house. Generally, the market value of houses increase with time and as a result, the rates and taxes on your property are most likely to increase.
The new rates will be effective from 1 July this year when the Valuation Roll is implemented.
So what does this mean for consumer indebtedness?
Taking into consideration all the additional rates and taxes consumers will have to cough up without corresponding increases in their income, improvement in consumer indebtedness levels will be minimal at best.
It may seem very bleak in the pocket but there have been many positives the past few days... the changes in government, the ongoing fight against corruption and the strengthening rand. Though the hikes may be hard to manage, the changes are a step in the right direction and should ultimately benefit us, the taxpayers and consumers.