By Rachel Mohamed
Parliament has officially voted on the national budget, passing it by a narrow margin. Among the most contentious elements is a proposed 0.5% increase in VAT, which has sparked significant political backlash. The Democratic Alliance (DA) has labelled the move a betrayal of the public, while ActionSA views it as a strategic attempt to reassess government spending and explore alternative revenue streams.
Speaking on VOC’s Sunday Live, Hugo Pienaar, Chief Economist at the Minerals Council of South Africa, said the country remains in a relatively favourable position, with inflation currently at a lower rate.
“The biggest impact of a VAT increase would be a general rise in prices—excluding goods that are zero-rated,” he explained. “If the additional 0.5% increase comes into effect next April, it will place further pressure on inflation and the cost of living.”
Pienaar also noted that an increase in interest rates remains unlikely.
“We are currently in an interest rate-cutting cycle. Over the past six months, we’ve seen a reduction of 75 basis points, and the Reserve Bank has chosen to keep rates steady,” he said.
Listen for the full interview:
VOC News
Photo: Pixabay
