Govt not opposed to cutting down VAT after Treasury meets revenue targets

JOHANNESBURG - Deputy President Paul Mashatile admits the government is not opposed to cutting down the value-added tax (VAT) after the National Treasury meets its revenue targets.

Mashatile’s comments come amid continued criticism about the impact an expected VAT hike will have on consumers, especially low-income households.

He was speaking at the inaugural Ahmed Kathrada Foundation business breakfast in Illovo.

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The February budget was unceremoniously postponed when the treasury proposed a 2 percentage point increase to VAT.

The proposal was later revised down to 1 percentage point staggered over two years, starting with a point-5 percentage point increase next month.

Budget 2025 created further divisions in the Government of National Unity(GNU) after the Democratic Alliance (DA)  and Freedom Front (FF) Plus refused to vote with the African National Congress (ANC).

But the ANC was able to get the fiscal framework over the line at the National Assembly last week – with the help of smaller parties.

With less than a month to go for the first increase to take effect, Mashatile had this to say, “We’ve already missed the 1st of April because that’s when the budget is meant to kick in. We’ve pushed it back to the 1st of May to give parties a bit of time to see if there’s anything else we can do. But we are not married to the VAT increase as a lifetime thing, it’s really just to cross this bridge now.”

However, experts have warned that reversing the VAT increase down the line may be impractical.