Finance Minister Malusi Gigaba was at pains to point out on Wednesday that a one-percent VAT increase, the first in 25 years in South Africa, should not be considered a blow to the country’s poor majority”.
“VAT has the least effect on the poor” compared to other tax hikes the National Treasury could have introduced, the minister told a media briefing shortly before he tabled the 2018 budget.
He said the increase was off-set by more social spending, including the introduction of fee free tertiary education for first-year students from poor and working class households and the piecemeal introduction of the National Health Insurance.
Gigaba said the measures were not aimed at creating a populace dependent on welfare, but would, coupled with the introduction of the national minimum wage in May, help the poor to uplift themselves. Unemployment was lowest among that sector of the population that had tertiary qualifications, and therefore free higher education should in the long run help curb joblessness.
“So the pain is only transitory. All of these are aimed at boosting the economy and freeing the poor from unemployment.”
– African News Agency (ANA)