Reluctant finance committee insists on review of effects of VAT hike in 2021
Chair Yunus Carrim says the committee has grave concerns about the VAT increase because of its negative effects on the poor and low-income earners
Parliament’s standing committee on finance has “reluctantly” agreed to the one percentage point increase in the VAT rate, but has insisted that the Treasury undertake a review of its effects in two-and-a-half-years’ time. The increase in the VAT rate to 15%, which was announced in the February budget, came into effect on April 1 but its legal provision is contained in the Rates and Monetary Amounts and Amendment of Revenue Laws Bill, which is under consideration by the committee. The committee has introduced an amendment to the associated Tax Administration Laws Amendment Bill, which will require the minister of finance to undertake a review of the VAT increase in March 2021, and report to the National Assembly on the findings before the end of June 2021. The review must evaluate the effect of the VAT increase on revenue collection and the poor. “This approach both provides certainty for the fiscus in raising the revenue required for the medium-term expenditure framework period and ...
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