Economists have raised concerns about the sustainability of the 0.5% VAT increase set to take effect at the beginning of May. Finance Minister Enoch Godongwana announced the hike as part of the revised fiscal framework, but the move has triggered significant political and public backlash.
This week, the DA and the EFF appeared in the Western Cape High Court to challenge the decision. The court has since reserved judgment. Judge President Nolwazi Mabindla-Boqwana acknowledged the complexity of the case but assured that a ruling would be delivered by Tuesday, 29 April at the latest. The parties will be notified if a decision is reached earlier.
Economist Ulrich Joubert voiced concern about the long-term implications of the increase, particularly in the context of South Africa’s stagnant economic growth. “We’ve had economic growth of less than 1% for several years, which is below the population growth rate. This means, as a country, we’re getting poorer,” he said.
Joubert explained that the VAT hike places additional strain on ordinary South Africans, as it is a tax borne by all consumers. He also warned that global instability—including potential sanctions from the United States—could further weaken the local economy and lead to job losses.
Given these challenges, Joubert argued that increasing VAT may not be a sustainable solution in the long term. Instead, he urged the government to review and manage its spending. “Most economists agree: the state must take a hard look at controlling its expenditure before turning to the public for additional revenue,” he noted.
Listen to the full interview below:
VOC News
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