CAPE TOWN: The government’s tax proposals to fill the gap in revenue, announced in the Budget last week, have generated a lot of comment. The left has been extremely critical of the increase in VAT, from 14% to 15%, arguing that VAT is regressive, and it places an undue burden on the poor. The right, however, has applauded the tax proposals as the best that could be done in very difficult circumstances. Sadly, there has been a lot of assumption, obfuscation and very little fact and clear thinking in evaluating these tax proposals. Almost none of the analysis has been based on the excellent data on tax in South Africa which are publicly available.
The Budget is about more than just about income and expenditure. It should provide a vision for the economy, which deals with the current challenges but also offers an insight into the type of society we want to build. The key message in the 2018-19 Budget is that South Africa’s public finances are in very bad shape, and we have to find more revenue.