Africa-Press – South-Africa. The decision to scrap the proposed VAT increase has raised concerns about where government will generate revenue to fund essential services.
Finance minister Enoch Godongwana announced the reversal of the 0.5 percentage point VAT hike which was set to take effect on May 1. The minister believed the increase was necessary to fund essential services in health, education, transport and security.
Godongwana said the decision not to increase VAT means measures to cushion lower-income households against the potential negative impact of the rate increase need to be withdrawn, and other expenditure decisions revisited. This means government will need to explore alternative revenue streams or adjust its spending priorities.
Some political parties have consistently opposed the proposed VAT increase, and some have suggested alternative solutions.
ActionSA has proposed the government should cut unnecessary expenses in the cabinet instead of increasing VAT. The EFF has suggested taxing high-income earning households, including introducing an “apartheid tax” targeting individuals who inherited wealth during the apartheid era.
Other parties have engaged in negotiations with the ANC to find alternative solutions to raise revenue.
Source: TimesLIVE
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