Economist Ntokozo Nzimande has criticized Finance Minister Enoch Godongwana’s decision to raise value-added tax (VAT), arguing that big businesses should have shouldered more of the financial burden instead of ordinary South Africans.
Nzimande believes the government missed an opportunity to adjust corporate tax rates rather than increasing VAT from 15% to 16% over the next two years.
"Corporate taxes—that’s where the minister should have looked. We are currently sitting at 27%, and while that may be high compared to our trade partners, that is the pocket that should have been tapped," Nzimande said.
Godongwana announced a half-percentage-point VAT increase for this year while delivering his revised budget in Parliament on Wednesday. However, the move has faced strong opposition.
The Democratic Alliance (DA), a coalition partner in the Government of National Unity, has vowed not to support the proposal, while the MK Party has outright rejected it. Trade unions have also raised concerns that the hike will disproportionately affect low-income citizens.
Despite his criticism of the VAT increase, Nzimande described the budget as generally fair and balanced.
"We are carrying too much debt—about 22 cents of every rand in revenue goes toward servicing it. The challenge is to stabilize the budget while ensuring government can still support the people. That is what the minister has tried to achieve," he explained.
The proposed VAT increase remains a contentious issue as the government seeks to balance its books without deepening the financial strain on South Africans.