Price increase on April 1 is no joke | Fin24
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Price increase on April 1 is no joke

Apr 01 2018 10:13

As from today, VAT increases from 14% to 15%. This is going to have a knock-on effect on all our bills because, technically, most of our expenses will increase by about 1%.

One way to alleviate the increase is to eat more healthy foods. Not only will passing up the sugary drinks save you from the new health promotion levy, but there are 19 zero-rated VAT foods including brown bread, maize meal, lentils, milk, eggs and fresh fruit and vegetables. Keep in mind that low-GI bread and rye bread have been reclassified and will attract VAT.

However, there is no way to avoid the increase on many of our monthly bills, including bank fees, airtime, data, water, electricity, insurance, medical aid contributions and DStv. All of these attract VAT.

Also remember that if you run your own business and are a VAT vendor, you will need to pass that VAT increase on to your customers.

The bad news is that VAT is not the only tax that will go up. Apart from a 52c increase in fuel taxes, there is also an increase in ad valorem excise duty on luxury goods – this includes cosmetics, perfumes, electronics and smartphones.

WATCH: 3 things hitting your pockets in April

Consumers are already battling to keep their heads above water and will have to face a triple threat to their pockets as of April 2018, and it's not an April Fool's joke.

Hopefully, you did not give in to temptation and use the looming tax increases as an excuse to spend on your credit card before prices went up, because the cost of borrowing is still significantly higher than what you would pay with the tax increases.

For example, if you recently paid R12 457 for a cellphone, after today the combined increase in ad valorum excise duty and VAT will add 3%, or R383 to the price.

If you bought it on your credit card and paid it off over one year, the interest payments would be about R1 386.

The only way to survive these increases is to be more vigilant when you spend and start working within a budget, so that you know exactly where your money goes each day.

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