Civil society organisation Undoing Tax Abuse (OUTA) has called on the government to abandon the proposed increase in Value Added Tax (VAT) and instead prioritise reducing wasteful expenditure.
OUTA CEO Wayne Duvenage denounced the VAT hike, arguing that it unfairly burdens the poor and that the Treasury should pursue other avenues to address the revenue shortfall.
“Treasury has opted for the easy option of a VAT hike rather than taking bold steps to cut waste, address inefficiencies, and tackle corruption. A VAT hike may be easy to collect, but it disproportionately impacts the poor. Government must focus on cutting waste and ending corruption before reaching into citizens’ pockets." Duvenage said.
He added: “South Africans and businesses are willing to contribute to building this country. However, we are tired of being asked to pay more while corruption and inefficiency go unchecked."
Minister of Finance Enoch Godongwana has suggested raising the VAT rate by 0.5 percentage points in both 2025 and 2026—a move that would bring the rate to 16% by the 2026/2027 fiscal year.
The proposal has faced strong opposition from various political parties, including from the Democratic Alliance (DA), the largest partner in the African National Congress (ANC)-led Government of National Unity (GNU). The DA has vowed not to support the new budget.
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"The ANC VAT budget doesn’t have a majority, and the DA won’t give it one. The DA wants a series of major reforms that will grow the economy, create jobs, reduce waste, and bring down taxes within three years. The ANC must accept that it no longer holds a majority," said DA leader John Steenhuisen
Critics warn that the VAT increase could severely impact vulnerable South Africans already struggling with the rising cost of living.
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