{"id":231829,"date":"2018-03-15T08:27:46","date_gmt":"2018-03-15T06:27:46","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=231829"},"modified":"2018-03-16T07:34:42","modified_gmt":"2018-03-16T05:34:42","slug":"guptas-partly-to-blame-for-vat-increase-report","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/231829\/guptas-partly-to-blame-for-vat-increase-report\/","title":{"rendered":"Guptas partly to blame for VAT increase: report"},"content":{"rendered":"

Renowned judge and head of the Davis Tax Committee, Dennis Davis, has spoken out against the incoming VAT increase, reports BusinessDay<\/a><\/strong>.<\/p>\n

Davis, who was\u00a0was addressing delegates at the Small Business Indaba in Bryanston on Wednesday (14 March), said that the 1% increase in VAT could have been avoided if the government had a better grip on the Gupta family\u2019s alleged state capture and billions of rand in runaway fruitless and wasteful expenditure.<\/p>\n

“Ask yourself, would we really have needed to collect R20 billion in VAT if we, even to a small extent, reduced corruption? To put up VAT \u2026 is difficult.”<\/p>\n

“The auditor-general\u2019s office had also highlighted unauthorised expenditure amounting to R60 billion – R80 billion in the public sector.<\/p>\n

“If we cut that down by 25% \u2026 if we said, \u2018Okay, we\u2019ll give you R40 billion to waste and we\u2019ll save R20 billion\u2019, we wouldn\u2019t have had to increase VAT,” he said.<\/p>\n

As of 1 April 2018, the effective VAT rate will rise from 14% to 15% adding approximately R22.9 billion to the fiscus.<\/p>\n

“In developing these tax proposals, government reviewed the potential contributions from the three major tax instruments which raise over 80% of our revenue; personal and corporate income tax and VAT,” Gigaba said during his budget speech in February.<\/p>\n

“We have increased personal income tax significantly in recent years, particularly at the higher income bands, and our corporate tax is high by international standards. We have not adjusted VAT since 1993, and it is low compared to some of our peers.<\/p>\n

“We therefore decided that increasing VAT was unavoidable if we are to maintain the integrity of our public finances,” he said.<\/p>\n

Inflation\u00a0<\/strong><\/p>\n

Speaking on Tuesday (13 March), Brian Kahn,\u00a0one of the Reserve Bank\u2019s top policymakers<\/a> <\/strong>said that the\u00a0central bank expects the hike in VAT to lift inflation by around 0.6 percentage points over the coming year, though it doesn\u2019t expect to raise interest rates in response.<\/p>\n

“With inflation targeting, you try and look through exogenous shocks, particularly temporary ones and this is a one off,” Kahn told\u00a0Reuters<\/a><\/strong>\u00a0on the sidelines of investor meetings in London.<\/p>\n

“There may be a few second round effects, it may affect wage increases in the following years, so we expect a moderate, very small increase in the following year as a result of that.”<\/p>\n

“But it is something that we would not react to by raising rates and we would certainly try and look through it,” he said.<\/p>\n

\n

Read: 4 big things that will affect the rand over the next few months<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Renowned judge and head of the Davis Tax Committee, Dennis Davis, has spoken out against the incoming VAT increase.<\/p>\n","protected":false},"author":10,"featured_media":224458,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[26],"class_list":["post-231829","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/231829","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=231829"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/231829\/revisions"}],"predecessor-version":[{"id":232247,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/231829\/revisions\/232247"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/224458"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=231829"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=231829"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=231829"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}