DA lays out steps to stop VAT increase in Parliament

Issued by Alf Lees MP – DA Shadow Deputy Minister of Finance
28 Feb 2018 in News

The Democratic Alliance (DA) has developed a comprehensive plan that will make use of parliamentary processes at our disposal to ensure that the proposed increases in tax, especially the 1% VAT increase is killed before it sees the light of day.

In the DA’s pre-budget preview presented on the 20th of February 2018, we pointed out that tax increases can be avoided and R112 billion made available through:

  • reducing the size of the executive, to about 15 ministries, which could save R13.8 billion over the medium term;
  • reducing the number of foreign missions by 69, which could save an estimated R3.9 billion over the medium term;
  • running the provincial legislatures more efficiently, which could save an estimated R R5.8 billion over the medium term; and
  • withdrawing from the New Development Bank, which would save an estimated R17.2 billion over the medium term.

Increasing VAT is unnecessary and is simply an easy way out for a government that is refusing to take responsibility for its poor management of the fiscus.

The proposed VAT increase to 15% will be introduced in and made effective by the draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill. The VAT increase will be effected from 1 April 2018, which is before the bill will be adopted or rejected by parliament.

However, the DA will be taking the following Parliamentary steps to stop the tax increases, with the focus on the VAT increase:

  • The DA will propose amendments to the Fiscal Framework and Revenue proposals in accordance with section 8 of the Money Bills Amendment Procedure and Related Matters Act 9 of 2009;
  • The DA will oppose and propose amendments to the Rates and Monetary Amounts and Amendment of Revenue Laws Bill, in order to counter the ANC proposed VAT increase, fuel levy increase and other tax increases;
  • The DA will propose amendments to the Appropriations Bill, in relation to expenditure cuts to compensate for tax increases proposed by the ANC and to make more funding available for infrastructure and child grants.

We will also be presenting longer-term options to consider to ensure that South Africa expenditure problem is addressed, as opposed to treating the symptoms.

Increasing VAT to paper over the financial mess created by decades of looting and wasteful expenditure by the ANC government is reckless. It exacts an unnecessary burden on poor South Africans who are already struggling to get jobs and put food on the table in an underperforming economy.

The fact is that tax increases could be avoided through targeted intervention, such as a comprehensive government expenditure review, to ensure that expenditure is brought down to manageable levels and waste is stopped as a matter of urgency.