According to Stats SA, over 64% of Black South Africans already live in dire poverty. Moreover, the official unemployment rate is now standing at over 40%, the average South African is already grappling with economic despair. The previous VAT increase has resulted in a 0.7% decline in consumer spending and a 0.5% rise in inflation. Yet, in the midst of this crisis, the government has chosen to increase VAT from 15% to 15.5%, and then to 16% the following year—a move that serves one purpose: keeping state coffers (which overwhelmingly benefit the corrupt) afloat.
Low-income households already spend up to 40% of their earnings on basic goods. Now since essentials like food, transport, and household necessities will become even more expensive, there will be little purchasing power left for these already struggling families.
This tax hike threatens to regressively exacerbate existing inequalities and plunge low-income households deeper into poverty.
This hike is poised to inflict even greater harm, compelling businesses to slash costs, potentially leading to more job losses.
Instead of taxing the poor to cover its inefficiencies, the government should be targeting those who can afford to pay more. Progressive taxation, closing corporate tax loopholes, and tackling corruption could have provided real solutions. Instead, the government has taken the easy route—forcing those with the least to carry the heaviest burden.