Mokonyane: Govt considering zero-rating more items in wake of VAT hike

Value added tax is to go up by one percentage point to 15% next month.

FILE: Communications Minister Nomvula Mokonyane. Picture: Lindsay Dentlinger/EWN

CAPE TOWN - Government is considering increasing the list of zero-rated items in the wake of the VAT increase announced by former Finance Minister Malusi Gigaba last week.

At a post Cabinet briefing on Thursday morning, new Communications Minister Nomvula Mokonyane said that ministers had reflected on the increase at its meeting on Wednesday.

Value added tax is to go up by one percentage point to 15% next month.

Mokonyane says that the kinds of items that may be added to the zero-rating food basket was not discussed.

"There were no time lines that were raised but what has been registered is that there is a team of ministers led by the Department of Finance that are going to be looking at the issues and the additional inputs that are being made."

Former Finance Minister Malusi Gigaba made the unpopular announcement to increase the VAT rate during his budget address last week.

Now, government departments will be going on a countrywide roadshow to explain the impact of the VAT increase, especially to vulnerable groups.

Cabinet says it wants South Africans to acquire a better understanding and appreciation for how the decision was reached to increase VAT for the first time since 1993.

Mokonyane says government is looking at areas to safeguard the poor from the increase.

“We are indeed a caring government that seeks to make sure we don’t punish those who are vulnerable and have no choice.”

A team of ministers led by the finance department has been tasked by Cabinet to look at the implications of the increase and to consider additional input from the public.