BUDGET
VAT hike more likely than higher income tax rates, say experts
The finance minister has almost no scope to hike personal income tax rates any further in the budget and will have no choice but to increase the (value-added tax) VAT rate from 14% to 15% to close the revenue gap, PwC tax partner Kyle Mandy said on Wednesday. Mandy is one of a growing number of tax experts predicting that the VAT rate will be hiked, despite the opposition this could cause, and that the finance minister may use the need to fund free higher education as a rationale for raising VAT for the first time since the early 1990s. Latest monthly figures confirm revenue is likely to fall R50bn short of target this year, in line with the Treasury’s October forecasts; government has already said the finance minister must find R30bn in tax hikes, as well as deep spending cuts, to get the budget back on track, and this even before taking into account the more than R12bn cost of the free fees measures. It’s unclear at this stage who the finance minister will be by next week, given t...
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