Value-Added Tax (VAT) was introduced in South Africa on 30 September 1991 through the Value-Added Tax Act 89 of 1991, at an initial rate of 10%. It was later increased to 14% in 1993 and then to 15% in 2018.
Now in 2025, the government is proposing another 2 percentage point increase in VAT, claiming it as a necessary measure to raise revenue. But was this increase really unexpected?
The reality is that VAT increases are not sudden decisions—they are planned well in advance. If this hike was not anticipated in 2018, then it speaks to poor economic management and a lack of foresight in balancing revenue with expenditure control.
South Africa is facing a deepening economic crisis—rising costs of living, high unemployment, and worsening inequality. Instead of cutting unnecessary government spending, the state is opting for a solution that burdens the poorest households while leaving the political elite untouched.
Tax Corporations, Not the Poor!
The government should consider increasing corporate tax by 2 percentage points instead of raising VAT. Large companies benefit from public infrastructure and services, yet ordinary citizens are always expected to bear the brunt of tax hikes.
A corporate tax increase would ensure that big businesses contribute their fair share without worsening the financial strain on low-income households.
The Real Impact of a VAT Increase
1️⃣ A Higher VAT Hurts the Poor the Most
VAT is a regressive tax, meaning that it affects low-income households more than the rich. A 2% increase will push struggling families deeper into poverty, while wealthy individuals remain largely unaffected.
2️⃣ Government Should Cut Waste, Not Tax the People
Why is the government looking for more money when it could simply reduce wasteful expenditure? The real issue is reckless government spending, not a lack of revenue.
3️⃣ A VAT Hike Fails to Prioritize Social Justice
South Africa’s budget should prioritize the needs of the poor over political elites. Any VAT increase must be scrutinized for its impact on food security, healthcare, and education.
4️⃣ Why Must the Poor Pay for Government Mismanagement?
The postponement of the Budget Speech raises serious questions about the state of our economy. Instead of raising taxes, government must be transparent about why it continuously mismanages public funds.
Where the Government Can Save Money Instead of Raising VAT
There are better alternatives to increasing VAT. Here are some of the obvious areas where government can cut waste and generate revenue:
✔ Bringing South African Troops Home from DR Congo – Millions are wasted annually on military operations abroad while local security issues remain unresolved.
✔ Reducing the Salaries of Ministers & Cabinet Size – South Africa has one of the largest cabinets in the world. Cutting ministerial salaries and downsizing cabinet could save billions.
✔ Reducing the Size of Parliament & Cutting MP Salaries – Many MPs are unknown to the public and have little impact on citizens’ lives. A leaner, more efficient parliament would save taxpayer money.
✔ Cutting Down Provincial Legislatures & Budgets – Provincial legislatures duplicate national government functions, making them unnecessary and costly.
✔ Selling Unused Government Land & Property – The government owns vast amounts of underutilized land that could be sold or leased for revenue.
✔ Increasing Rent on Government-Leased Land – Many businesses and farms operate on government-owned land at outdated rental rates. Adjusting these rates could bring in significant income.
✔ Eliminating Corruption & Wasteful Expenditure – Billions are lost to corruption and inefficient procurement processes every year. Stronger audits and financial oversight could recover much-needed funds.
Our Message to Government: Do Better!
Instead of raising VAT and placing more burden on the poor, South Africa must focus on:
Cutting wasteful government spending
Reducing the cost of governance
Generating revenue from state-owned assets
The public deserves leaders who serve their interests, not faceless politicians who drain resources without accountability.
Take a Stand!
We must reject the VAT hike and demand that government tax corporations instead of burdening ordinary citizens.