A lot has been said about the increase in VAT from 14% to 15% as announced by the Finance Minister in his recent budget speech. There are certainly many sectors that are going to feel the shift in tax, however it might be the man and woman on the street who will be hit hardest.
Unfortunately consumers are directly impacted by tax increases due to our participation in a multitude of industries. We’re economically active and as purchasers of an array of products and services we feel the knock on effects of the suppliers. Who have to make changes in order to buffer the impact on their businesses.
Undoubtedly for the tenant and home owner food costs, as well as recent petrol price hikes, will influence affordability and budgets. For some the VAT increase might only be a few rand, for others it could be thousands.
It is imperative that you start adjusting and analysing the potential impact different expenditure increases will have on your budget. It is always better to be prepared than caught by surprise and then being forced to make last minute changes.
By having insight into budget amendments you will have the advantage of adjusting certain payments to account for increases. Cut down on unnecessary and wasteful expenses so that you continue being able to pay your bills or even fortunately save a little every month.
If you’re renting - now might be the best time to consider purchasing a property. With interest rates cut by 25 basis points, bringing the repo rate to 6.5% and the prime lending rate of banks to 10%, your value on monthly property expenditure might be more in your favour if you buy now.
Harcourts Africa Chief Executive Officer