Opposition parties criticise Treasury for hiking VAT
Economic Freedom Fighters (EFF) leader Julius Malema said that Treasury had run out of ideas on how to generate the country's revenue.
Finance Minister Enoch Godongwana's new proposal will raise the VAT rate to 15.5 percent and add 28 billion rand to the fiscus in this financial year. Picture credit: GCIS
CAPE TOWN - Opposition parties have criticised National Treasury for hiking the value-added tax (VAT) by one percent over the next two years.
Finance Minister Enoch Godongwana made the announcement while tabling his national budget policy statement in the National Assembly on Wednesday.
Economic Freedom Fighters (EFF) leader Julius Malema said that Treasury had run out of ideas on how to generate the country's revenue.
Malema said they would vote against the budget.
"We agree that we need to protect SRD. We agree that we need to invest in infrastructure. But let's tax the rich, let the corporate tax be increased. Let there be tax on the wealthy people of South Africa who buy buffaloes for R22 million. Those people should be made to pay and finance the social responsibilities of the state."
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MK Party leader in Parliament, John Hlophe, said that the minister's decision to increase VAT was the wrong one.
"Increasing VAT by any percentage is disastrous. Increasing it by 0.5% this year and next year as well, the people who are going to suffer the most are black people."
Meanwhile, trade union federation COSATU said it was disappointed by the increase in VAT announced in Wednesday's Budget Speech.
COSATU parliamentary coordinator, Matthew Parks, said this was going to be difficult for workers who were already drowning in debt.
Parks said that government had other options.
"We had given other alternatives to government about improving tax compliance by SARS, by looking at additional taxes that the wealthy can pay or reduce some of the tax loopholes. There are options around shifting some of the expenditure within the budget."
Parks said that all the other good things in the budget were overshadowed by the VAT increase.
"So for us, it drowns out the good things in the budget, like investments in infrastructure, public employment programmes, some relief for social grant recipients, some relief for the poor. But those get drowned out by the VAT hike, so for us, it's a missed opportunity and could've really done a far better job shielding the poor."