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20180220 Ch 4 FINAL corrected.doc

374 Revenue trends and tax policy In brief Tax revenue collections for 2017/18 are expected to marginally outperform projections set out in the 2017 Medium Term budget Policy Statement (MTBPS), but additional measures are required to stabilise the public finances. Tax policy proposals are designed to raise R36 billion in additional tax revenue for 2018/19. Following a review of tax instruments to determine their potential contribution to medium-term fiscal objectives, government proposes to increase the value-added tax (VAT) rate by one percentage point to 15 per cent. To support the progressivity of South Africa s tax system, the top four personal income tax brackets will not be adjusted for inflation, and ad valorem excise duties for luxury purchases will be increased.

2018 BUDGET REVIEW 38 The main tax proposals for 2018/19 are: • A one percentage point increase in VAT to 15 per cent. • No adjustments to the top four income tax brackets, and below-

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