SA’s VAT hike under scrutiny
New research suggests SA should scrap the zero-rating of VAT items and introduce a new social grant which would benefit those who fall outside the welfare net
25 July 2019 - 05:00
When the government hiked VAT last year, after many years of personal income tax increases, it did so on the basis of economic efficiency — because studies showed that, of the major taxes the government could potentially raise, increasing VAT would cause the least harm to growth and job creation.
However, a new study has found there is a welfare cost to hiking VAT, not at the aggregate level, but at the level of the poorest of the poor — and that this group can never be fully compensated for VAT hikes by increases to social grants, because they mostly don’t qualify for these benefits...
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