South Africa’s VAT Increase Proposal: Balancing Revenue and Economic Impact
Finance Minister Enoch Godwana proposed increasing the VAT (VAT) from 15% to 17% to address the severe budget deficit. The proposal led to a cabinet crack, leading to an unprecedented delay in the introduction of the state budget. Proponents believe that increasing VAT will generate basic income and will be more effective than other taxes. However, critics argue that its impact on low-income households is disproportionate, exacerbating inequality. Political disharmony underscores the challenge of implementing such fiscal measures within a coalition government. Balanced demand for increased income with potential socio-economic impacts remains a complex issue for South African policymakers.
source: dialogue
