South Africans may need to buckle up and prepare for a bumpy financial ride if the Minister of Finance, Tito Mboweni announces a hike in VAT during the 2020/21 Budget Speech at the end of this month.
Speaking to CapeTalk, PwC reported that hiking VAT up by 1% – from 15% to 16% – could produce up to a whopping R25-billion of extra revenue into the empty Government purse.
“On the basis that an increase in the rate of VAT will have the least harmful effect on the overall economy and its ability to raise substantial amounts of revenue with relatively small tax increases, it should be the preferred instrument for raising additional tax revenues,” PwC said.
Another option to create more revenue for Government is payroll tax, but analysts have little doubt that this option is viable as it will force consumer pockets to lighten even more.
An increase in value-added tax will have South Africans across the country digging deeper into their pockets every time they purchase a product meaning we won’t just have petrol, electricity and rent to worry about.