Budget speech: South Africans can't afford another VAT hike, says economist
Finance Minister Tito Mboweni, delivers his Budget speech next week and economist Dawie Roodt says when he's done, South Africa could be paying more for food and other items.
There's been talk in the financial circles that Mboweni could announce a 1% Value Added Tax increase on items bought.
This would take the current VAT from 15% to 16% and would put around R25 billion more into government's purse.
Roodt says in a country where food is already expensive, and households spend a significant portion of their income on it, - South Africans can't afford another VAT hike.
"I'm afraid the reality is that South Africans on an average basis have been getting poorer the past five years, because of a lack of economic growth."
"But there's a very good possibility that if there is an increase in VAT that the Minister of Finance may decide to include some other basic food stuff into the basket of things that on which there are no VAT charge, like for example chicken."
Roodtt says a VAT increase is simply unsustainable and that it will undermine economic growth.
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