By Samke Mhlongo
Hello darlings! It’s hard to believe that it is only the beginning of the third month of 2018, given everything that has already happened in our country’s political and economic landscape. We had one of the most inspirational State of the Nation Addresses of the past decade, and a Budget Speech that saw ex Finance Minister Malusi Gigaba quote “urban poet” Kendrick Lamar in parliament (something I would suggest he leave to the Cassper Nyovests of this world).
Meet our new finance contributor, Samke Mhlongo
Although I am no political analyst, one has no choice but to keep a close eye on the political developments in our country as they affect our pockets directly. It is for this reason that we at BONA felt it necessary to bring you our “Pocket Politips” – the top 5 financial tips to navigate political pronouncements that will affect you within the next few months.
#1: VAT rate hike
Effective 01 April 2018, South Africa’s VAT rate will increase from 14% to 15% on all goods and services that are not zero-rated. Zero-rated goods are made up of basic food items like brown bread, fuel, education and residential accommodation (so your bond or your rent).
All other goods and services, by and large, are subject to VAT and will increase in price come the 1st of April. The easiest way to shield your pocket from the negative impact of a VAT increase is to substitute branded items for more affordable house-brands.
#2: Free higher education
R57 billion has been set aside to fund higher education over the next three years for students coming from families with a total annual income of no more than R350,000. Applications for funding must be made through the tertiary institutions financial aid office, once the prospective student has received confirmation of acceptance. Upon application, the student will need to provide:
• South African green bar-coded or smart ID or birth certificate (preferably unabridged)
• IDs of parents/guardian
• IDs of ALL people staying in the household
• Pay advice or letter of employment or pension advice of parent/s or guardian/s (not older than 3 months)
#3: Fuel Levy hike
The sum of the General Fuel Levy and RAF LEVY will increase the total fuel levy from R4.78 to R5.30, an 11% increase which is well above inflation. You will especially feel this increase if you rely on public transport as the price of your commute will increase significantly from the 1st of April. One tip to reduce the impact of this cost is to join a car pool as the monthly cost of private transport is can be cheaper than that of public transport.
#4: Increase in Sin Tax
Taxes on beers, spirits, wines and tobacco are increasing by between 6 and 10%. This is another blow for wine lovers like myself. A simple way to save at the till is to substitute your favorite international brands for local brands. I will certainly be dropping the champagne in favour of the locally produced Methode Cap Classique – it’s good for the local economy too.
#5: Limited Income Tax rebates
Sadly, Minister Gigaba offered a sub-inflation increase to the tax rebates meaning we will be paying slightly more tax given the effect of inflation.