- PwC suggests that South Africa’s National Treasury may need to increase value-added tax (VAT) to generate new revenue.
- Finance Minister Enoch Godongwana plans to announce new tax measures to raise an additional R15 billion in the budget.
- The country is facing increasing debt and spending needs, which may be worsened by upcoming elections.
- Corporate and personal income taxes are not viable options for generating additional revenue.
- To raise the desired amount, the Treasury may need to increase VAT by 0.5% to 15.5%.
- Mining companies’ profits have been affected by lower commodity prices, power cuts, and logistical issues, making corporate taxes unreliable.
- The last VAT increase was in 2018, and a new increase may be more acceptable if tied to a popular social relief grant for the unemployed.
- The Treasury could use a similar model to the 2018 VAT increases, which were used to fund free higher education.
- Linking a VAT increase to the social relief grant could provide justification for the increase.
Source: businesstech.co.za
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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