JOHANNESBURG - Value-added tax has increase by 0,5 percentage points this year. Another 0,5 next year, will push VAT up to 16 percent by April 2026.
It’s better than the two percentage points increase, proposed by Finance Minister Enoch Godongwana a few weeks ago, but not everyone is happy.
Currently, government spends more than it collects in revenue.
The VAT increase will result in government getting R28 billion more this year and an additional R14 billion more next year.
The additional income will also allow government to hire more frontline workers such as teachers and doctors.
It will also allow for more investment in education and rail services.
With an economy that’s only expected to grow at 1.8% over the next three years, government is in trouble. It needs to find more effective ways to bring in the money.