Maimane backs calls for VAT hike reversal
Civil-society bodies have called on Parliament to halt the proposed increase in valueadded tax saying such a move would make the tax regime more regressive and worsen already unacceptably high levels of poverty and inequality.
Civil society bodies have called on Parliament to halt the proposed increase in value-added tax (VAT) saying such a move would make the tax regime more regressive and worsen already unacceptably high levels of poverty and inequality.
In his budget speech last week Finance Minister Malusi Gigaba announced a one percentage point hike in VAT to 15%.
Civil society groups including Section 27, Institute of Economic Justice, Public Service Accountability Monitor, and Studies in Poverty and Inequality Institute, said a reconsideration of the tax regime was not to be taken lightly and therefore not something National Treasury could unilaterally decide on.
“Such decisions can be made only after their potential effects, particularly for the most vulnerable, have been assessed and exhaustively debated, and where the proposed changes are shown to be in the interest of a more equal society.”
They said the use of VAT as a major source of revenue was acceptable only if accompanied by measures to lessen its regressive impact significantly.
“This is why civil society has historically called for a combination of expanding the range of zero-rated VAT goods, while implementing a higher VAT band for luxury goods (this could be tax neutral).”
They called for Treasury to present its evidence that VAT would have only a limited impact on the poor and to demonstrate all other options would be of greater detriment to the most vulnerable.
At the weekend, DA leader Mmusi Maimane launched a national petition opposing the VAT increase, saying: “The raising of VAT … in effect means that we will all be paying 7.14% more tax on everyday goods and services. This, combined with a significant fuel levy increase, will make food and transport more expensive. It will now be more expensive to be unemployed in South Africa. Life will get harder for the most vulnerable in society over the coming months.”