What a 2% VAT hike would mean for the average consumer in South Africa

CapeTalk and 702's Africa Melane interviews Ronald Matande, a Tax Practitioner and Head of Operations at the Financial Planning Institute of Southern Africa.

Listen below:

The postponement of the 2025/26 National Budget Speech marks a critical juncture for South Africa’s economy.

Matande explains that VAT is a tax that affects everyone, but it disproportionately burdens lower-income households, leading to reduced consumption. 

This, in turn, creates a ripple effect across businesses, ultimately contributing to higher unemployment rates.

For the time being, South Africans can breathe a little easier, as the 2% increase would have a short-term negative impact, particularly because VAT applies to most goods and services, raising their costs and putting additional strain on consumers' wallets, he adds.

While VAT is appealing to tax authorities due to its broad reach, Matande warns that if not carefully managed, its ripple effects can be 'quite dire if not managed properly'.

"It would've really been something that a lot of South African consumers would not have welcomed."

- Ronald Matande, Financial Planning Institute of Southern Africa

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