South Africans can brace themselves for yet another wave of tax increase but only this time it's the Value Added Tax on a peak. Since the dawn of democracy VAT has never been tampered with until recently when former Finance Minister Malusi Gigaba made the announcement.
VAT increases by 1% in an attempt to generate an additional R36 billion for the national purse as a result of SARS missing its tax collection targets. SARS reportedly fell behind by R48,2 billion.
Concerns were echoed throughout the whole of South Africa with trade unions and civil society organisations opposing the VAT increase.
Although Gigaba maintained that the poor will not be affected since there are 19 basic food items that are 'zero rated' the public was not convinced. Other necessities such as toiletries and clothes, just to name a few, are still taxed making it extremely difficult for the less fortunate.
The positive side of the budget speech, however, included an increase in social grants and taking the first leap towards free higher education.