Finance Minister, Enoch Godongwana, proposed raising the value-added tax (VAT) from 15% to 17% to address a significant budget deficit. This proposal led to a cabinet rift, resulting in the unprecedented postponement of the national budget presentation. Proponents argue that increasing VAT would generate essential revenue and is more efficient than other taxes. However, critics contend that it disproportionately affects low-income households, exacerbating inequality. The political discord highlights the challenges of implementing such fiscal measures within a coalition government. Balancing the need for increased revenue with potential socioeconomic impacts remains a complex issue for South Africa’s policymakers.
Source: The Conversation