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AA: Increasing VAT, fuel & road levies 'could be catastrophic' for citizens

Tito Mboweni is set to deliver his second Budget Speech on Wednesday in Parliament, where he will announce - among other things - any increases that will affect the public.

Picture: EWN.

JOHANNESBURG - The Automobile Association (AA) has written a suggestion to Finance Minister Tito Mboweni to not increase the value added tax (VAT) and fuel levies, as it said this would have a serious negative impact on many South Africans.

Mboweni is set to deliver his second Budget Speech on Wednesday in Parliament, where he will announce - among other things - any increases that will affect the public.

In 2018, then Finance Minister Malusi Gigaba announced a VAT increase of one percentage point from 14% to 15%, the first since the dawn of democracy.

“The Minister will have to walk a trickier fiscal tightrope than many of his predecessors, and he will undoubtedly be seeking relief from different quarters to ease the country’s financial burden. This places him in a tough position where he will have to meet the needs of the country while at the same time ensuring there is enough money coming into government coffers to satisfy demand," the AA said on Monday.

"Previous years have seen higher than inflation-linked increases to the fuel levies – the General Fuel Levy, the Road Accident Fund levy, customs and excise taxes and the Carbon Tax. However, given the fact that many South Africans are buckling under severe financial constraints, such an increase this year will be more than detrimental, it could be catastrophic."

The AA added that increasing fuel and road levies would affect public transport costs, which has an enormous impact on the lives of consumers who rely on every cent to make it to the end of each month.

According to the association, such adjustments should be considered an absolute last resort.

In addition, the AA said any proposed increase to the rate of VAT along with an increase to the fuel levies would be a double blow for consumers and the motor industry as a whole, one many would not be able to cope with.

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