Highlights from the 2018 Budget Speech 2018


"This is a tough, but hopeful budget", Gigaba said.

Donations tax rate increases from 20 per cent to 25 per cent on donations of more than R30 million.

READ: Fact-Check: The Poor Won't Pay The Most For The VAT Increase. Labour, meanwhile, has responded to the Budget with disappointment. Vulnerable households will also be compensated through an above average increase in social grants.

Currently South African's contribute about 37% of the gross to tax revenue, and have noted big increases in tax rates over recent years.

We are of the view that the alternatives to hiking VAT to close the revenue gap could be resolved by fixing the administrative capacity of the SA Revenue Service (SARS), including its ability to tackle tax avoidance and evasion by corporates and the wealthy because billions are taken out of the country illegally every year.

Gigaba had to sell tax hikes, for VAT, personal income tax, the fuel levy and sin taxes, with questions mounting about his credibility.

Banks, as proxies for the South African economy, will benefit from improved sentiment if Moody's doesn't downgrade the country's sovereign debt and the Value-Added Tax increase leads to accelerated growth, said Alec Schoeman, managing director at Citigroup Global Markets in Johannesburg.

"Most of the missing middle now qualifies for free education as well".

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"A fund with an allocation of R2.1-billion over the medium term is being developed between the Departments of Small Businesses and Science and Technology, and benefit small and medium enterprises during the early startup phase".

This makes higher education and training the fastest growing line item on the budget at 13.7%.

Funza Lushaka bursary scheme also received a financial injection of R 3.7 billion.

"After several years during which economic growth undershot our projections, we now see the improved growth projections for 2018 and subsequent years as a floor, rather than a ceiling".

Faced with a ZAR48.2 billion hole to fill, Gigaba found some interesting ways to raise the necessary revenue.

Mwandiambira said the announcement of free education will assist both the poor and the "missing middle" class.

The rand has advanced 12% since Ramaphosa was elected as leader of the ruling African National Congress in December, setting him on a path to become the country's president when Jacob Zuma resigned last week.

South Africa opposition, Democratic Alliance (DA), disagreed with him that the Zero-rating food will provide relief to the poor.