South Africans urged to budget as VAT increase comes into effect

Economist Azar Jammine says the other issue is that personal tax rates are also increasing.

Picture: EWN

JOHANNESBURG - South Africans have been urged to budget for the value-added tax (VAT) increase which came into effect on Sunday.

VAT increased from 14% to 15%.

Former finance minister Malusi Gigaba defended government's decision to implement the hike, saying it's necessary to stabilise the country's finances.

Concerns have been raised about how the increase will affect South Africans, along with soaring fuel and food prices.

Economist Azar Jammine says the other issue is that personal tax rates are also increasing.

“Personal tax rates are going to rise by virtually in such a way to erode their disposable income by a similar amount and that is by virtue of the fact that the government did not compensate by raising tax brackets sufficiently to compensate for the increase in people’s salaries.”

Fuel prices are also going up.

From the stroke of midnight, consumers will have to fork out between 69 and 72 cents for petrol.