VAT hike rejected, but what’s the alternative?

There are a number of logical, and laudable, reasons why Finance Minister Enoch Godongwana wants to impose his shock two percentage point increase in value added tax (VAT).

Apparently, his pitch to parliament – and to the public – in his budget speech was going to have been that the country was caught between a rock and a number of hard places.

He believes we only have three choices when it comes to finance – none of which are particularly palatable.

We could cut funding to essential services that people depend on; take on expensive debt that would burden future generations or make “strategic tax adjustments” to secure the nation’s future.

It would have taken some soul-searching to go for the VAT hike option because the ANC – which appears to have championed it against other members of the government of national unity (GNU) – would have known it would hurt the poor most, would cut demand and lead to inflation increasing.

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Perhaps, with their populist mindset, they might have tried to contain pushback from their constituency by hinting it was the other GNU parties which pushed them into it.

Unfortunately for them, the savvy DA got in first by casting itself as a socialist defender of the poor in its opposition to the VAT increase.

If not VAT, then what? Do what Elon Musk is doing in America and slash the civil service…

The fact that the ANC flinched at that means the party is still one of patronage and its running dog, corruption. A lot of people owe their jobs to the ANC and that is a powerful reason for the party not to upset them.

So, our bloated and inefficient civil service will be with us for some time.

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Unless that is dealt with, no amount of “strategic tax adjustments” is going to save us.