In his February Budget speech, then finance minister Malusi Gigaba, announced a Vat increase of 1 percentage point effective from the 1st of April 2018. This is our first Vat increase in 25 years and according to Mr. Gigaba, it was necessary in order raise the R36 billion needed this financial year.
Amongst other increases announced in the budget speech were the increase in fuel levy to 52c/L and the 6% to 10% increase in sin taxes.
Government insists that these increases will not affect the poor because essential items are exempt. Which is not necessarily true because firstly nobody survives only on essential items and even if they did, the increase in fuel means the cost of the essential items is most likely to increase. Transportation costs will also increase for all consumers. They plan on mitigating these effects by increasing government grants but that will obviously not completely alleviate the added financial burden. Let us also keep in mind that due to the high unemployment rate, there are a number of South African who do not have any source of income whatsoever, so whatever little money they have will now be worth even less.
Even though everyone will feel the pinch, it is middle class consumers who will suffer the most. They are neither rich nor poor, they do not benefit from government provisions made for the poor yet their pockets are not deep enough to get by without feeling the strain. They also most likely have to support unemployed children/relatives too.
Therefore this increase, proudly brought to us by our government, comes at a cost to ordinary South Africans. I understand that government needs to do what is necessary in order to improve our economy, but could they just acknowledge that we are in this position because of their mismanagement/corruption and that the increases will affect our standards of living. They could also throw in an apology as well.
The question now is will we see any results from the sacrifices we are forced to make.