Yunus Carrim: ANC didn't want VAT hike
Finance Minister Malusi Gigaba announced this on Wednesday when he presented his maiden budget speech in the National Assembly.
CAPE TOWN – Parliament's Standing Committee on Finance says that it is opposed to the decision to increase value added tax (VAT) and is concerned over whether the National Treasury investigated the repercussions of this decision.
For the first time in democratic South Africa, VAT has been raised from 14 to 15%.
Finance Minister Malusi Gigaba announced this on Wednesday when he presented his maiden Budget Speech in the National Assembly.
Committee chair Yunus Carrim says: “In short, we as the ANC are very concerned about VAT. We didn’t want it particularly, in fact, we’re glad it’s not 2%.
“We’re worried about whether National Treasury has done an impact study to show its effects on the poor and lower income earners.”
He says they will hold discussions with Treasury on this move.
Carrim adds Treasury must explain exactly where the money is going.
“We want to engage with Treasury. We will begin so this afternoon on whether we can exempt certain basic food items that the poor consume. If VAT has to be introduced, which we can decide not to, we want to know what this money will be used for.”
Trade unions, civil society organisations and some opposition parties have also criticised the decision.
Meanwhile, Gigaba has defended Treasury's decision to increase value added tax (VAT), saying that it was long overdue with the country out of options.
Gigaba unveiled a R1.67 trillion budget on Wednesday.
On Thursday morning, the minister unpacked his budget at a post-Budget briefing in Cape Town.
He says that his department took the decision to implement free higher education for the poor and working class to avoid another student protest.
Treasury will now hold back on some of its capital projects and reduce spending to find the R57 billion to fund education.
He says that students must understand that the money will come from taxpayers and that they must pass.
"We need to be very blunt because this is a lot of money. The people of South Africa are going to pay to educate our children. Like I say with my own children, that I'm spending a lot of money sending you to school, I want you to pass, I'm not giving you the option to fail," Gigaba said at the briefing.