Today in the run-up to the Budget Speech, the parties in the Government of National Unity (GNU), such as the FF Plus, demonstrated that they will not be bullied as they put their foot down regarding the proposal to hike Value Added Tax (VAT) with two percentage points.
The Budget Speech, which was scheduled for two o’clock today, has been postponed until further notice. It is the first time since 1994 that such a drastic step – postponing the Budget Speech – has been taken.
After the national budget’s details were announced to political parties this morning, several parties, including the FF Plus, made it clear that they would not support it.
A staggering hike of two percent in VAT will, in the FF Plus’s view, have a direct and significant impact on South Africa’s economy.
Besides, it is an indication of the fiscal crisis in which the country finds itself, and the party will also strongly oppose any legislation on this in the National Assembly (NA).
The previous VAT increase has already shown that VAT is not a goose laying golden eggs amid a bankrupt economy and impoverished community. The truth of the matter is that it will further stagnate the economy and exacerbate the economic crisis.
The national budget should, instead, focus on cutting back needless government expenses, squandering on luxuries as well as government’s unsustainably high wage bill.
Economic growth is the only thing that can save South Africa and tax hikes will knee-halter it. Instead, the focus should be on creating a favourable policy environment for the private sector to expand and create jobs.
Better fiscal discipline is needed to address budget deficits – not tax hikes.
When government tries to drain money from the people, one third of which are unemployed with more than half of the youth having no job or income, it will only do more harm than good.
To make matters worse, America is tightening the money taps to South Africa in response to racist and draconian legislation, such as the Expropriation Act. The international community and investors are not blind to this.
Over the course of the last few weeks, economists across the board have warned against a VAT hike. South Africa’s tax rates are already exorbitantly high, while its companies’ tax is no longer internationally competitive.
The high tax rates have already established a trend of tax evasion among ordinary South Africans. And the FF Plus is concerned that hiking taxes further will only exacerbate it.
