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VAT: A glimpse into the ANC’s thinking?

Wednesday, 09 September 2015   (0 Comments)
Posted by: Author: Ingé Lamprecht
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Author: Ingé Lamprecht (Moneyweb)

Comments at Tax Indaba suggest hike probably unlikely.

As government considers various options to generate more tax revenue, it will be mindful that these interventions do not adversely affect the poorest of the poor.

peaking at the Tax Indaba 2015, Des van Rooyen, Member of Parliament’s Standing Committee on Finance, said as economic conditions get tougher, government is left with few options to generate revenue, but it will aim to strike a balance.

His comments follow the release of the Davis Tax Committee’s first interim report on VAT (published in early July). While the report did not explicitly recommend an increase in the VAT rate (currently 14%), it suggested that government might want to keep this option open as a funding model for the National Health Insurance (NHI) or other significant capital expenditure projects.

Many tax commentators believe a hike in the VAT rate is probably the best solution to government’s fiscal problems, but unions have been quite vocal in their opposition to these suggestions. VAT is perceived as a regressive tax that is more detrimental to the poor.

Van Rooyen said government is concerned that any potential hike in the VAT rate might adversely affect the poorest people "and we must indicate that as a ruling party this is not our option”.

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