South Africa’s fight over VAT raises a key question: who should bear the burden of taxes?

MSN - 20/04
The unprecedented postponement of the tabling of South Africa’s 2025 budget because of disagreement within the coalition government over a two percentage point increase in value added tax (VAT), highlights the country’s dilemma. The government needs to raise revenue to deliver on its constitutional obligations. But in a context where the global outlook is uncertain […]

The unprecedented postponement of the tabling of South Africa’s 2025 budget because of disagreement within the coalition government over a two percentage point increase in value added tax (VAT), highlights the country’s dilemma.

The government needs to raise revenue to deliver on its constitutional obligations. But in a context where the global outlook is uncertain and unpredictable, trade-offs are required.

South Africa has a deficit of around 4.3% of GDP, accounting for R377 billion (US$20,479 billion). According to the Unpublished budget review public debt stands at 76.1% of its GDP.

Whereas the public debt as a percentage of GDP is in line with that of similarly sized economies, its debt servicing costs are considerably higher. The country pays around 5...
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