Gigaba says increasing VAT was “unavoidable”
Written by Keshia Jansen on February 21, 2018
Finance Minister Malusi Gigaba has announced that the VAT will be increased from 14% to 15%.
Gigaba made the announcement during the Budget Speech on Wednesday.
The increase, which is set to take effect on 1 April, is expected to raise R22 billion in additional revenue.
During his speech, Gigaba noted that the VAT has not been increased since 1993.
“It is low compared to some of our peers,” said Gigaba.
Gigaba explained that increasing the VAT was “unavoidable” given that we maintain “the integrity of our [country’s] public finances.”
Basic food items such as maize meal, brown bread, dried beans and rice will maintain its zero-rating, thereby limiting the impact of the VAT increase on the poorest households.
In addition to the VAT increase, South Africans will also experience an increase of 52 cents per litre for fuel.
Read the full speech here.