2% VAT hike will fix SA’s budget shortfall. Does Gigaba have the stomach for it?

Malusi Gigaba at a briefing. Picture: AFP

Will Minister of Finance Malusi Gigaba announce an increase in the VAT rate?

If so, by how much?

Increasing the VAT rate may be a quick and effective fix to plug the R50 billion budget shortfall.

Hiking it by 1% will bring in an additional R22 billion, while a 2% hike will just about solve the country’s fiscal nightmare by bringing in an extra R48 billion.

The Money Show’s Bruce Whitfield interviewed Lesley O'Connell, VAT and Indirect Tax Partner at PwC South Africa.

Listen to the interview in the audio below (and/or scroll down for quotes from it).

I don’t think the Minister has a choice… We all thought last year was the year… What's easier to do than to increase the VAT rate?

Lesley O'Connell, PwC

Do the poor still eat fresh fruit and vegetables? Lentils? Brown bread?

Lesley O'Connell, PwC

VAT brings in a third of revenue…

Lesley O'Connell, PwC

If people stop stealing money there’ll be a lot more in the kitty too!

Bruce Whitfield

You need something big to plug that hole…

Lesley O'Connell, PwC

The best way to do it is to remove zero ratings… and then subsidise the poor…

Lesley O'Connell, PwC

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