“The projected GDP growth of 1.5% will be challenged by a VAT increase to 15% and the 52c/l increase on the fuel levy as these two factors will drive headline inflation to rise above expected levels in 2018. Additional taxes will put consumers under pressure and limit spending in the economy. We can expect the domestic spending on agricultural products to be negatively affected as a result.” – says Wessel Lemmer, Senior Agricultural Economist at Absa AgriBusiness
“We welcome Minister Gigaba’s announcement today that the two new Twin Peaks authorities will be established on or soon after 1 April 2018.
“The implementation will strengthen South Africa’s approach to consumer protection and create a more resilient and stable financial system. This will have significant implications for the financial sector and, in particular, the insurance industry.
“We need to make sure our industry remains safe by evolving our regulatory sphere to protect the financial stability of the country and its consumers” – says Johan Ferreira, African Unity Life’s Chief Legal Advisor
“In the Budget speech, the Minister emphasizes how alleviating poverty and inequality continue to be the primary goal, and this is reflected in the allocation of R528.4 billion on social grants over the next three years, the R324 billion provided for higher education and training, including R57 billion of new allocations for fee-free higher education and training. The commitment to addressing inequalities in South Africa is also reflected in no punitive tax changes at the lower end of the income bracket, which is where the most economic pinch is felt” – says Kwaku Koranteng: Acting Head: Absa Asset Consulting
“A 1 percent increase in Value Added Tax (VAT) could add as much as 22 billion rand in revenue. This will be beneficial in moderating the fiscal deficit and improving the social protection spend.
“Notwithstanding that VAT is a regressive tax system that adversely affects consumers of a Low Living Standard Measure (LSM) more than any other income group, we also expect this system to bear headwind inflationary threats to the SA Consumer Price Index (CPI).
“The economic costs of increases in levies on fuel is expected to result in high transport costs, increases in SA inflation rates, increases in short-term borrowing rates and slow growth in local economic activity.
“Our CPI forecasts for 2018 and 2019 are currently at 5.2 percent and 5.3 percent respectively. This is 10 basis points behind the National Treasury’s two year estimates,” – says Keorapetse Leballo, Investment Strategist, Absa Wealth and Investment Management
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