VAT hike sparks outrage

The Democratic Alliance (DA) has voiced strong opposition to the African National Congress’s (ANC) proposed Value Added Tax (VAT) increase, warning that the measure will disproportionately burden ordinary South Africans, particularly the poor and working class, by driving up the cost of essentials such as food, transport, and electricity.

Chris Santana, DA Shadow Member of the Mayoral Committee (MMC) for Finance in the City of Johannesburg, criticized the proposal as a: ‘lazy, short-term fix’ for years of ANC mismanagement, corruption, and wasteful spending. According to Santana, the increase fails to address the root causes of South Africa’s economic woes, and instead places further strain on vulnerable households and small businesses.

Read more: Find out if you are supposed to submit a tax return to SARS

“During Government of National Unity (GNU) negotiations, we made it clear we would only back temporary tax hikes if paired with bold pro-growth reforms – like tax cuts within three years – which they refuse to deliver,” Santana said. “This VAT hike is a desperate attempt to plug holes in a sinking ship.”

The DA has argued that the proposed increase would deepen economic inequality, particularly in Johannesburg, where rising living costs are already squeezing residents. “Johannesburg is home to township families and middle-class workers already stretched thin. Poor households, who spend most of their income on necessities, will suffer most, as even small price hikes erode their purchasing power, pushing more into poverty.”

The economic fallout could also be severe for small businesses, which Santana described as the backbone of Johannesburg’s economy. “Higher prices will force consumers to cut back on spending, threatening local jobs and worsening unemployment.”

Also read: Capital Gains Tax for property owners

In response, the DA has outlined alternative measures to reduce waste and improve efficiency without resorting to tax hikes. Santana proposed a three-month emergency spending review, a hiring freeze on non-essential government roles, a 33% cut in travel and catering expenses, and a payroll audit to eliminate ghost workers. “We would prioritise infrastructure—fixing roads, rail, and logistics links, like the Cape Town port – to boost trade and jobs.

“Public-private partnerships would be fast-tracked to improve services, while tax relief, and simpler regulations, would spark small business growth. These steps would drive economic activity and deliver value to Johannesburgers, without hiking VAT.”

The proposed increase has also sparked concerns from local business owners, like Tamara Chetty, owner of Pet Care in Blackheath. Chetty warned that the hike would further squeeze small businesses, already under pressure from rising costs and competition with larger corporate retailers. “Consumers may choose cheaper products, or go without, impacting turnover. At the same time, expenses will rise, squeezing margins even tighter,” Chetty said.

She also highlighted the social consequences of increased costs, suggesting that lower-income families might struggle to afford proper care for their pets, potentially leading to more animals being abandoned or rehomed.

The DA has pledged to fight the VAT increase and push for responsible governance that cuts waste and prioritises growth over taxation. “We’re fighting for a Johannesburg where families don’t have to choose between putting food on the table and keeping the lights on,” Santana concluded. “This city deserves a government that delivers – not one that reaches deeper into its residents’ pockets to cover up its failures.”

Follow us on our Facebook, X, Instagram, and TikTok pages. Join our WhatsApp group for any story ideas you may have.

Related article: All the taxes we pay is, well, taxing