Middle-class consumers will bear the brunt of tax reforms announced in Wednesday’s budget, despite there being no increases to personal income taxes, say experts. Following the first VAT increase in SA’s democratic history, consumers would pay more for all goods except the most basic food items, suggesting the middle class would be hardest hit, said PSG Konsult research head Ronald King. The VAT increase would drive inflation higher, hitting the "average consumer’s" pocket the hardest, said Kwaku Koranteng of Absa Asset Consulting. It would also increase the cost of saving and investment products, said Lance Solms, MD of iTransact. "Massive tax deductions are still available via retirement annuities and tax-free savings accounts," King said.
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