- The Parliamentary Budget Office (PBO) criticized the National Treasury’s plan to increase VAT, calling it regressive and inappropriate for the current economic climate.
- The government passed the fiscal framework with a narrow majority in the National Assembly.
- The VAT rate is set to increase to 15.5 percent in May 2025 and to 16 percent in April 2026.
- The PBO highlighted rising unemployment rates since fiscal measures began in 2012, with youth unemployment at 45.6 percent in 2024.
- The National Treasury plans to mitigate the VAT impact on vulnerable households through social grant adjustments and expanding zero-rated food items.
- The PBO argues these measures are insufficient to protect against inflationary effects.
- Retail prices of essential foods remain high despite lower producer costs, undermining protective measures.
- An increased VAT will heavily impact middle
- and low-income earners, who spend a large portion of their income on essentials.
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.
