Supplementary Budget 2020

Govt looking at ways to soften the VAT blow - Nene

Johannesburg – Government will continue to hold talks with stakeholders in a bid to soften the blow for the poor from the impact of the VAT increase which comes into effect next month, Finance Minister Nhlanhla Nene told Federation of Unions of South Africa (Fedusa) members on Monday. 

Nene said the VAT increase by 1 percentage point to 15% had attracted a lot of criticism and it was important that the public know the reasons behind the hike.

"We are going to be engaging stakeholders to find amicable ways of how best to soften the blow particularly for the poor and vulnerable," Nene told delegates attending a Fedusa meeting in Pretoria.

"We will be looking at expanding the list of zero-rated goods." 

READ: Treasury open to reviewing zero-rated VAT items 

Several civil society groups and labour unions have expressed concern over the increase which was announced by Nene's predesessor, Malusi Gigaba, during the Budget Speech in February, amid poor economic growth.

Nene's appointment last month in a Cabinet reshuffle by President Cyril Ramaphosa marked Nene's return to the portfolio he held for nearly two years before he was fired by then president Jacob Zuma in 2015.

"We are committed to finalising many outstanding policy reforms, such as the mining charter, and decisively act against corruption in the private and public sector," he told delegates.

He also told delegates his department would move swiftly to resolve "governance and operational failures" at state-owned enterprises, particularly in Eskom, revealing that he would soon be meeting with the new minister of Public Enterprises Pravin Gordhan to discuss the financial state of public firms.

The governance of state-owned enterprises has often been raised by ratings agency as a key area of concern affecting economic growth and good governance.

Nene said ratings agency Moody's was currently in the country to discuss monetary issues.

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