Gigaba announces VAT hike, R85bn cut in govt spending

Delivering his Budget speech, Malusi Gigaba’s also announced that R57 billion will be spent over the next three years to phase in fee-free higher education.

A YouTube screengrab of Finance Minister Malusi Gigaba delivering the Budget speech in Parliament on 21 February 2018.

CAPE TOWN - Finance Minister Malusi Gigaba has announced a one percentage point hike in value-added tax (VAT) and an R85 billion cut in government spending over the next three years in what he’s calling a “tough but hopeful Budget”.

The fuel levy is also set to rise by 52 cents a litre.

Delivering his Budget speech in Parliament, Gigaba’s also announced that R57 billion will be spent over the next three years to phase in fee-free higher education.

He says difficult decisions had to be made to try and contain the government’s spiralling debt, close the hole in his budget and finance fee-free higher education.

“This is a tough but hopeful Budget; it required us to make difficult but necessary trade-offs, important to ensure that this Budget is a platform for renewal, inclusive growth and job creation.”

Gigaba says the economic outlook’s improved since his Medium-Term Budget policy statement in October but the government will be dipping into every South African’s pocket to help it map its way out of the economic doldrums and to fix the country’s finances.

The first VAT hike since 1993 and other tax measures will raise an extra R36 billion this financial year.

Social grants are to be increased above the inflation rate in a bid to offset the impact of the VAT.

WATCH LIVE: Gigaba delivers Budget speech


He was heckled when talking on the country entering a recession.

“We got into a recession, we got into ratings downgrades and heightening concerns regarding the governance and substantiality of key state-owned companies. Despite this, the country’s economic growth outlook has improved.”

There was stiff opposition to Gigaba delivering the Budget speech.

The Democratic Alliance's (DA) John Steenhuisen says Gigaba was found to have lied before and cannot be trusted to deliver the speech.

“Madam Speaker can I just ask that you look at the rule before ruling… you must do that upfront because if you do that upfront I have the motion ready.”

The DA highlighted a High Court finding that Gigaba deliberately lied under oath in a matter related to Fireblade Aviation's VIP terminal at OR Tambo International Airport.

That ruling emerged just recently and the DA has laid a complaint against Gigaba with the Public Protector.

A Congress of the People Member of Parliament also objected to Gigaba presenting the budget under a cloud of allegations related to state capture.

The Economic Freedom Fighters boycotted the speech.