Let’s be honest about this VAT hike—nobody really understands what’s happening.
There’s something called a fiscal framework, a committee, a parliament, and a budget. Somehow, these were all processed through what seems like artificial non-intelligence, resulting in a VAT increase so South Africa can fund its latest questionable expense—whether it’s biltong research or whatever else the government spends money on.
Adding to the confusion, the SACP opposes a VAT hike but criticizes the main party fighting against it, calling them neoliberal and accusing them of pushing austerity. Then there’s ActionSA, which claimed to have stopped the VAT hike, only for us to find out they actually voted in favor of it, hoping to block it within 30 days. Somehow.
Call me skeptical, but praying for a miracle over the next four weeks isn’t going to work. And the fallout could be disastrous. If the ANC sidelines the DA and expects ActionSA’s support instead, they’ll first need to help Herman Mashaba clean the egg off his face. After that, a tender will likely be issued to update ActionSA’s performance tracker—since the supply of eggs isn’t endless.
VAT, in some form, has existed since 1978, back when it was called General Sales Tax. It’s never been popular among people who, you know, buy things. Yet some are eager to push for it. Maybe they like the idea of the rich paying more. Maybe they enjoy the thought of the state having extra money to spend. Or perhaps they’ve just given up and are relieved the increase wasn’t even higher. At least the government hasn’t yet taxed WhatsApp usage or imposed a tariff on speaking English.
But even with increased revenue from a higher VAT, President Cyril Ramaphosa’s U.S. counterpart seems determined to make things harder by imposing tariffs on South African goods. That could lead to some interesting—and likely painful—results.
This is the short-sightedness of our leadership. Raising VAT to boost tax revenue is a ridiculous idea because VAT depends on market activity. If trade slows, it doesn’t matter what the VAT rate is—revenue will drop. VAT’s success is tied directly to economic growth.
Sure, international buyers can often claim VAT refunds, so taxing foreign trade might not seem catastrophic. But consider local businesses that rely on foreign customers—they could collapse if those sales dry up.
This is why economic growth is crucial. Without it, VAT revenue will shrink, trapping us in a cycle of rate hikes because the underlying support for VAT simply isn’t there.
There’s a lot of talk about inclusive growth, which sounds great. But what good is that if we don’t have meaningful growth to begin with? Some of our most promising economic figures since 2010 likely came from the GNU. Now, that seems to have fallen apart, and the poor? They’re still poor, except now the things they buy cost even more.
Strangely, this might be a big reason why the ANC lost support. People started realizing their policies weren’t working, so doubling down on the same approach is a puzzling strategy. But like the DA, the ANC is a party that sticks to its convictions—even when they don’t make sense.
If only they could align those convictions with actions that actually improve lives. Taxpayers don’t necessarily mind paying taxes—they’ve been doing it for years. What they mind is seeing their money wasted on empty promises instead of real improvements. Public healthcare was a great idea, well-funded at first, but now we’re told we need NHI.
South Africa, the dream was nice. Now, we need forward-thinking, genuine leadership. Until then, VAT it is.
