'If you are the cigar smoking,whiskey type, you will be hardest hit by sin tax'

PwC Chief Economist, Lullu Krugel says the increase in the Value Added Tax (VAT) rate of one percentage point to 15% was unavoidable and will impact every South African in some or other way.

Finance Minister Malusi Gigaba announced a 1 percentage point increase and an R85 billion cut in government spending over the next three years, as well as other tax hikes expected to bring an extra R36 billion in revenue this year.

READ: #Budget2018 - VAT hike and R85 billion cut in govt spending

If you are towards the lower end of people that actually have a job, they will probably be the one's that feel this the most. If you look at South Africans that earn R 30 000 and there about, the one's that will be in the minimum wage category, they will probably be the one's impacted the most.

Lullu Krugel, PwC Chief Economist

On the value of sin tax, Krugel says it is a source of revenue for the fiscus that has been growing gradually over the years.

She says whiskey drinkers will be hardest hit by this year's increase.

It is still an important gap that treasury uses to collect tax and quite frankly if you look at the two areas where the highest increases were, you are thinking of people drinking whiskey and smoking cigars. You will be hit the hardest with the sin tax.

Lullu Krugel, PwC Chief Economist

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