Everyone’s talking about Budget 2018, but how will it affect you directly?
VAT is currently 14% and will increase to 15% on 1 April 2018. 19 basic food items such as brown bread, rice and maize are zero-rated. This is the first VAT increase since 1993.
You’ll also be paying more for wine, beer and tobacco, petrol, but there’s a bit of tax relief for low-income earners, with an increase in the tax threshold.
Budget Insurance has given us 6 ways you might feel the pinch from Budget 2018, plus some clever budgeting tips:
1. Alcohol and tobacco
Taxes, known as excise duties, on the not so healthy items in our baskets increase from 1 March 2018. A pack of 20 cigarettes will cost R1.22 more and 25g of pipe tobacco will cost 38 cents more.
Wine lovers will pay 30 cents more for a 1 litre bottle, and when you’re celebrating with a bottle of sparking wine you’ll need an extra 97 cents.
Spirit drinkers will pay R4.80 more for a 750ml bottle of their favourite tipple. Beer and cider drinkers need deeper pockets too. 340ml cans of malt beer and cider increase by 14 cents.
2. Sugary beverages
Sugary drinks will be taxed if they contain more than 4g of sugar per 100ml. You can find the sugar content on the drink’s nutrition label.
A 340ml can of a well-known soda contains 10g of sugar per 100ml. For every gram over the 4g limit, an extra 2.1c is levied. Your can that cost R10 will cost R10.12 from 1 April 2018.
3. Petrol and diesel
On 4 April the price of petrol will increase by 52 cents a litre. 30 cents of this is for the road accident fund levy and 22 cents for the general fuel levy.
4. Plastic bags and incandescent light bulbs
The plastic bag levy increases to 12 cents a bag on 1 April, and there’s an increase from R6 to R8 on incandescent light bulbs. Switching to energy efficient light bulbs will save you some money.
5. Luxury goods such as electronics, cosmetics, smart phones and golf balls
These goods incur tax of between 5 and 7%, this will increase to 7 – 9%.
6. Higher income earners will pay more tax
If you earn less than R78 150 and are under 65 years you won’t pay any income tax. This is known as the tax threshold. Over 65s don’t pay tax if their income is lower than R121 000 and over 75s, R135 300.
You can work out your tax from the tax tables in the 2018 Budget People’s Guide.
Here’s a guide to smart money management:
– To draw up a budget, start with a list of fixed expenditures and other monthly deductions. Have a careful look at what you are spending your money on and identify where you might be “leaking” cash on non-essentials like take-aways, entertainment and satellite TV, as well as on essentials such as your cellphone, groceries and transport. Once you have pinpointed areas where you could be spending less, start cutting back.
– Remember, even the smallest adjustments can make a meaningful difference over the long term. Channel the extra money you have into paying off your debt faster, starting with those with the highest interest rates first. As your debt repayments start getting smaller, you will have more and more money to allocate to your personal savings and other more worthwhile causes – such as saving for retirement planning, a deposit on a new house or a holiday.
– Set a savings goal for yourself and consider saving as a non-negotiable, essential ‘expense’ on your monthly budget. Whether your goal is to put away R250 or R1 000 a month, put it in your budget and stick to it.
– Be honest about your debt obligations and your expenses so that you have a clear and realistic picture of your true monthly spend.
– Get creative when looking for ways to cut back on costs. For instance, you could establish lift-clubs to save money on petrol and encourage your family to switch off lights in unoccupied rooms to save on electricity costs.
– Put away your credit cards. Don’t carry them around in your purse or wallet as you might be tempted to spend. Rather carry a debit card for everyday purchases and save-up for the more expensive things you want.