Budget 2023
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WATCH: VAT hike will shatter the poor, warns expert

Johannesburg - A value-added tax (VAT) increase will have a devastating effect on the whole country, warned Debt Rescue CEO Neil Roets.

South Africa’s VAT rate, which is somewhat lower than the global average, was introduced in 1991 at 10%. It was hiked to 14% in 1994.

Currently, zero-rated items are brown bread, maize meal, samp, mealie rice, dried mealies, dried beans, lentils, tinned pilchards, milk, cultured milk, milk powder, dairy powder blend, rice, vegetables, fruit, vegetable oil, brown wheat meal, eggs and paraffin.

READ:  VAT may well be Gordhan's biggest political headache - analyst

Roets explained to Fin24 in a video interview that the poorest of the poor will especially be hardest hit should Finance Minister Pravin Gordhan raise the VAT.

"If VAT is increased by 1% from 14% to 15%, it will give government an extra R20bn a year to work with. So it will solve a lot of the problems for government but obviously not for the public."

* Visit our Budget Special for all the budget news and in-depth analysis.

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