Proposed tax increases puts pressure on households

Posted On Thursday, 03 November 2016 14:17 Published by
Rate this item
(0 votes)

The ratings agencies have been circling for months with many fearing a downgrading to junk status, and South Africa’s economic growth rate has been narrowed from 0.8% in February to 0.5%.

Bruce_Swain_MD

It’s fair to say that South Africans are feeling the pressure of a struggling economy – something that’s set to continue into 2017 and beyond.

During his medium-budget address Minister Pravin Gordhan announced that additional taxes to the tune of  R43bn will be raised over the next two years, with R13bn being raised next year to bring the total tax increase to R28bn in 2017/2018. Whether these taxes will be in the form of company or personal taxes, sugar taxes or VAT remains to be confirmed, what is certain is that it will all feed down to households at some point.

“Admittedly Minister Gordhan has limited space to manoeuvre within the current framework and we support his call for a tightening of belts. That said, the proposed tax increases will certainly place the residential property market under further pressure”, believes Bruce Swain, MD of Leapfrog Property Group.

According to the FNB Property Barometer; “The housing market slowdown has become more broad-based, with a loss in quarter-on-quarter house price growth momentum across all 4 Major Metro Area Value Bands recently”. John Loos, FNB Household and Property Sector Strategist, attributes this to mounting financial constraints due to “house price inflation exceeding per capita income growth, rising interest rates, and growing concern amongst consumers about their economic and financial future in a very weak economy. As yet, though, there is not widespread financial stress”.

Advice to Home Owners and Buyers Alike

“At this point my advice to homeowners and buyers saving up to purchase a home is to assess their fixed costs – adjusting their budgets accordingly. It’s almost certain that utilities like water and electricity and petrol prices will increase over the next few months as well as the tax increases. As such it’s crucial for households to review their budgets to ensure that they’re able to cover the basics. It’s also critical to settle as much debt as possible to avoid further pressure on household finances”, says Swain. 

Last modified on Thursday, 03 November 2016 14:28

Most Popular

Tshwane Regional Mall Grand Opening date set

Aug 31, 2019
  TSHWANE REGIONAL  MALL
24th October 2019, the long-awaited day earmarked for the grand opening of Tshwane…

Attacq Ltd and Tricolt break ground on Ellipse Waterfall

Aug 30, 2019
 13 2
Today Attacq Ltd the JSE listed REIT developing Waterfall City, and Waterfall Logistics…

Redefine Properties appoints Daisy Naidoo as independent non-executive director

Aug 30, 2019
 STRATE 1
Redefine Properties appoints Daisy Naidoo as independent non-executive director.

Founder Marc Wainer retires from Redefine Properties

Aug 31, 2019
 MARC WAINER
JSE listed diversified real estate investment trust Redefine Properties today announced…

Eris Property Group appoints successive CEO Barend de Loor

Aug 30, 2019
 BAREND DE LOOR
Eris Property Group has appointed a new Chief Executive Officer (CEO). Barend de Loor…

Please publish modules in offcanvas position.