Scrapping of VAT hike a big plus for South Africans

FINANCE Minister Enoch Godogwana, after pressure from political parties, has finally cowered and scrapped the proposed 0.5% increase in Value-Added Tax (VAT).

- MASHUDU SADIKE

The decision comes after intense negotiations and pressure from various political parties, who argued that the increase would burden the poor and working class.

It was the news many South Africans hoped and the announcement already got the Rand moving in the right direction by strengthening slightly after Finance Minister Enoch Godongwana confirmed the decision to scrap the VAT hike.

The Rand moved to a value of R18.6650 against the US dollar, which a modest gain of 0.1% from the previous day's close.

Last month, the finance minister proposed to increase the VAT from 15% to 15.5% after his Budget Speech was postponed in February when he proposed to increase VAT by 2 percentage points.

The DA has claimed victory in getting the National Treasury to drop its intended 0.5 percentage point VAT increase.