VAT hike is Zuma’s legacy

MISMANAGEMENT COSTING TAXPAYERS Decline in tax morality will have to change to achieve the budget goals for the next few years.

significant political will and unpopular decisions to achieve and, from the mood of the press conference, it seems clear that there is a perception that this will not happen under Gigaba.

It is also apparent that an improvement in our fiscal position is directly linked to accelerated economic growth. There is absolutely no wriggle room for future financial engineering to address structural issues in the budget and economy. The 2018 budget will, however, be remembered as the one where VAT hit 15%, the first increase since its introduction in 1993. It is a direct consequence of the damage the Zuma administration inflicted on the economy, and all South Africans will have to pay cash for the consequences of his and his administration’s poor and corrupt leadership.

This VAT hike follows a significant decline in tax morality. This trend needs to change to achieve the budget goals for the next few years, but it will be extremely tough to reverse under Gigaba. A key question is whether the budget would have had a different message if someone else tabled it in parliament. A lot of speculation preceded the budget that Ramaphosa would sack Gigaba and appoint a credible minister to remove integrity concerns.

This could have boosted even more the already-bourgeoning confidence levels that followed Ramaphosa’s election as ANC leader and his inspiring State of the Nation address.

Time will tell whether Ramaphosa missed a trick or whether it was another excellent strategic decision.

The answer may be with the imminent Cabinet reshuffle.