The excise duty rate on luxury goods goes up from 7% to 9%.
“This is a tough but hopeful budget,” Gigaba said on Wednesday in his first budget presentation since his appointment by Zuma in a much-condemned cabinet reshuffle last year.
While the VAT increase to 15% was expected to send shockwaves, Gigaba said it was “unavoidable if we are to maintain the integrity of our public finances”.
“The current zero-rating of basic food items such as maize meal, brown bread, dried beans and rice will limit the impact on the poorest households,” he said.
At a media briefing ahead of the budget, Gigaba said the national Treasury had to accommodate new spending priorities, including a R57-billion allocation to the fee-free higher education and training plan.
The minister also announced an above-inflation increase in social grants, which he said he hoped will counter the sting of the tax hike.
The old-age pension will rise from R1,600 to R1,690 on April 1 and by a further R10 on October 1. The child support grant is being raised from R380 to R400 on April 1, and by a further R10 on October 1.