AS South Africans brace themselves for the increase in Value Added Tax (VAT), the National Treasury remains adamant they will go ahead with the 1% increase despite public outcry.
The former minister of finance Malusi Gigaba had announced during his budget speech that South Africa will see its first VAT increase in 25 years and as of April 1, VAT will increase from 14% to 15%.
According to the Treasury, the move will add at least R 22, 9 billion to the government coffers.
In his speech the former minister said that the tax increase was unavoidable and that government had to maintain its public finance integrity.
“The country’s co-operate tax is higher by international standards. We have not increased VAT in more than 25 years and ours is relatively low compared to our counterparts,” said the former Minister.
The question on everyone’s lips is how will low income earners be affected as it is well known the South Africa is one of the most unequal societies.
It cannot be disputed that the working class will feel the pinch the most.
Despite the exclusion of certain items deemed necessities such as basic food items including bread, maize, beans and rice, it must be noted that families do not survive on these VAT exempt items alone.
To gain a local perspective the Stanger Weekly took time to speak to people from around KwaDukuza who had mixed views with regards to Treasury’s decision to increase VAT.
Thobile Nyawo-Ndawonde from Glendale said the VAT increase will drive inflation even higher especially for the poor.
“This will hit hard even in those small savings a person has and investments, I mean we already getting cellphone messages on the increase of rates and for people like us it will be more difficult,” she said.
Another resident, Simosakhe Shange said the VAT increase by government is all but officials covering the states money they have looted.
Siyabonga Dube of Ashville said: “We need to have a non-political view about the matter as the increase is long overdue since 1993.
“If you look at countries like Sweden or England for that matter the VAT is as high as 20 to 25% which makes trading with these countries more difficult as you pay more compared to what they pay us,” he said.