Paul Mashatile positive that solution will be found over VAT hike

Deputy President Paul Mashatile on Friday said he is “positive” that political parties will find a solution to avoid the value-added tax (VAT) increase proposed by Finance Minister Enoch Godongwana.

Mashatile was speaking during the Good Friday service at the Assemblies of God church in Thaba Nchu, Free State.

VAT increase: Paul Mashatile confident solution will be found

Mashatile asked the church to pray for South Africa’s leaders. He did this as political parties are discussing alternatives to the 0.5% increase in VAT. The VAT hike is set to come into effect on 1 May.

“I think so far, they have met all the parties that have agreed to come, so we will know by Monday where to – but I’m positive that we will find a solution,” the deputy president said.

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The ANC’s majority government of national unity (GNU) partner, the DA, has opposed Godongwana’s budget because of the VAT increase.

Despite this, the budget was passed with the assistance of ActionSA and the IFP. However, there are still objections to the VAT hike, and parties have discussed possible alternatives.

“There are always options. What we are looking forward to is that they will say these are the options, which direction do we take, but we will find the solution,” said Mashatile.

Godongwana under pressure

Godongwana is under pressure to find an alternative to the VAT increase. If the VAT increase is scrapped, the finance minister will have to find R13.5bn from somewhere else to fill a hole in the budget.

Speaking to the Sunday Times, an ANC leader said it has become clear that there will be no support for the budget if it includes the VAT hike.

Although the fiscal framework has been adopted, the budget requires other legislation to be passed, such as the Appropriations Bill and Division of Revenue Bill.

“The VAT thing, including even in the ANC and everybody else, is not going to pass. The increase in VAT is not going to pass,” the ANC leader said.

“The minister of finance is under pressure now to … kick it into touch or take it out completely. That is where things are now.”

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