2024 Budget: Is a Vat increase the best solution to boost the coffers?

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‘Government, even in an election year, can make the point to say, well, we are in a tight corner, we don't want to cut back on expenses, the economy's not really growing yet as much as we would like it to grow, so to generate additional revenue, we are considering Vat,’ says Maarten Ackerman, chief economist at Citadel.

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So your question about how they’re going to cut back on expenses, that is probably the most difficult part of the budget. JEREMY MAGGS: And we know that there is a current revenue shortfall, so where does he need to look strategically from a tax perspective? Again, with the caveat that we are in an election year.

So not physically increasing the percentage that you pay, but definitely make sure that those brackets remain in line with inflation. So that will definitely happen. MAARTEN ACKERMAN: You’re 100% right. But there again, Vat will at least provide the opportunity to say, well, we can add more zero Vat items to that mix. So looking after the poorest of poor or the low-income consumers. Even if they want to go that far, they can say, well, buying certain cars above a certain limit they double the Vat.

MAARTEN ACKERMAN: Yes, so that is one of the big on the fiscus. We know that it’s been coming for years. We talk about the big ones like Eskom and Transnet, but it’s basically all 700 of them. Most of them are looking for funding and not really adding productive capacity to the economy. So I think the fact that the big ones failed over the last couple of years, and without providing, bailout after bailout, we haven’t seen results.

 

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