Skip to main content

Increase in VAT off the table

| Economic factors

While the easiest way for the government to collect the revenue it needs is to raise value-added tax (VAT), this is not on the cards for political reasons, says Judge Dennis Davis, chairman of the tax advisory committee.

Finance Minister Pravin Gordhan has said the government has to raise an additional R28bn in tax to meet fiscal targets over the medium term.

The new tax measures will be announced in February.

Davis was speaking at an Investec panel discussion in Johannesburg.

He said the best options to raise new revenue were: raising the tax rate to 45% for the highest earners; clamping down on base erosion and transfer pricing by companies; and through the exchange control amnesty.

It was possible that the skills development levy would be raised a percentage point to 2% to help fund increased funding to higher education.

Higher corporate taxes were also not an option due to the risk of dampening investment.

Pin It

Related Articles

SA retail sales up 2.3% in March

Stats SA reports that retail trade sales increased by 2.3% year-on-year in February 2024. The largest contributor to this increase was general dealers (6.4% and contributing 2.8 percentage points).

Massive tax increases to fund NHI – destroying ...

By: Shaun Jacobs – Daily Investor Funding the government’s National Health Insurance (NHI) scheme would require a 31% increase in personal income tax, or a 6.5% increase in VAT, or a ten times increase in payroll tax, threatening South Afric...

SA consumers’ disposable income eroded by high ...

By: Given Majola - IOL Business South African consumers’ disposable income was being eroded by persistently high interest rates and inflation (especially food inflation) while a lack of any meaningful economic growth was constraining their salaries.

Nearly half of South Africans struggle to affor...

By: Xolile Mtembu - IOL South Africans spend over one-third of their income on food, and growing costs have a significant impact on their finances.

Petrol price earmarked for another hike in May

By: Siphelele Dludla – IOL Business Report THE Automobile Association (AA) has warned of another petrol price hike in May that will push the cost of living even higher for financially-constrained consumers, as inflation also remained sticky above...