Finance Minister Pravin Gordhan on Wednesday deemed value-added tax a “regressive” measure and indicated that he was not in favour of raising it in future.
“The key principle that government has been worried about is that VAT is a regressive tax and that VAT increases on a generalised basis, without proper relief to people in the lower income, lower section economic categories can have a hugely damaging effect,” he told a media briefing shortly before tabling the 2016 budget.
He rejected suggestions from the media that he had opted to keep it at 14 percent — where it has been for some two decades — because an increase could cost the government support in upcoming local government elections.
“Local government elections have got nothing to do with it.”
Gordhan on Wednesday announced increases in excise duty as part of efforts to increase the state’s revenue but told reporters that Treasury was and would remain deeply committed to not imposing austerity measures on the country.
Edited by: African News Agency
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