Sameera Casmod | sameerac@radioislam.co.za
20 February 2025 | 13:12CAT
1-minute read

Image: Times Live

Leaked copies of Finance Minister Enoch Godongwana’s upcoming budget speech have revealed a proposal to increase the VAT by two percentage points. The proposed increase is aimed at funding wage hikes for public servants, retaining teachers and doctors, and expanding early childhood development programs. However, the move has already sparked significant criticism, with some experts calling it a “regressive tax.”

Wayne Duvenage, CEO of the Organisation Undoing Tax Abuse (OUTA), expressed strong opposition to the VAT hike, arguing that it would burden ordinary citizens and exacerbate economic challenges.

“VAT is a regressive tax. It hurts everybody, pushes up inflation, and leads to more unemployment and less investment. It’s the worst place the government can go for additional revenue,” Duvenage said in an interview on Radio Islam International.

The government has defended the proposal, arguing that corporate tax hikes or increased taxes on high-income earners would not generate the necessary revenue. According to Duvenage, this argument is misleading. He pointed out that inefficiencies, corruption, and wasteful government spending should be addressed before imposing additional financial burdens on citizens.

“There is about R30 billion lost annually due to illicit trade in tobacco and alcohol. If the government tackled this, it would recover a significant portion of the funds needed,” Duvenage asserted. He further highlighted the mismanagement of skills development levies and excessive spending on bloated government departments and unnecessary expenditures, such as blue-light brigades and military operations.

In addition to the VAT increase, the leaked speech reportedly outlines efforts to generate an additional R60 billion in revenue. However, Duvenage maintains that addressing systemic corruption and inefficiencies would be a more effective strategy than increasing taxes.

With the full speech now leaked, analysts predict further public debate and potential backlash against the proposed tax hike. The government is expected to provide further clarification when Godongwana formally delivers his budget speech in the coming days.

Listen to the full interview on Sabaahul Muslim with Moulana Sulaimaan Ravat.