



South Africans should brace themselves for a possible hike in the VAT rate when Finance Minister Tito Mboweni presents the 2020/2021 Budget Speech at the end of the month.

According to PwC, hiking VAT by one basis point to 16% will inject R25 billion of extra revenue into the Government’s empty purse.

On the basis that an increase in the rate of VAT will have the least harmful effect on the overall economy and its ability to raise substantial amounts of revenue with relatively small tax increases, it should be the preferred instrument for raising additional tax revenues. PwC

There has been talking that the only effective lever left to pull could be to raise VAT by one percentage point to 16%, which would inject between R20 billion and R35 billion in revenue. Although it would be a particularly unpopular move politically, it is increasingly possible. Mike van der Westhuizen, Portfolio Manager - Citadel

For more detail, read "VAT hike may be only option".