FOOTNOTES
HILARY JOFFE: VAT increases target the rich more than the poor, say researchers
As it turns out that VAT in SA is definitely progressive, because of all the zero-rated and exempt items
When R28bn of tax increases were announced in last year’s budget — much of this in higher personal income taxes — there wasn’t much loud protest or debate. Nor was there in 2016, when the finance minister announced R18bn of tax hikes, about half of it from higher excise taxes. Tax policy is not something that South Africans tend to debate very much, but one big plus of the controversy over the increase in the value-added tax (VAT) rate announced in last week’s budget is that it has the potential to put tax policy issues on the table in a useful way. The increase is the first in a quarter of a century, but in percentage terms it’s a hike of under 1%, as Treasury officials are keen to point out. From 14% to 15% may be a 7% increase, but in reality you’re paying R115 including VAT for an item that previously cost you R114 — an increase of 0.87%. Not that that’s insignificant for a poor household, and the core questions being raised in the controversy around VAT are about the poor, all ...
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