Social activists warn VAT hike will erode funds for education and health

CAPE TOWN  - Social activists have warned that any rise in the value-added tax (VAT) rate will erode any increased funding allocation towards schools and health facilities.

Human rights organisation Section27 and other non-governmental organisations raised concerns during public hearings into the division of revenue bill on Friday.

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The bill forms part of the budget and deals with the equitable division of revenue among national, provincial and local government spheres and still has to be adopted by Parliament.

Section 27's budget analyst, Matshidiso Lencoasa, says the VAT hike will have a far-reaching effect.

"We are of the view that the rise in costs that are forced by the VAT increase will erode any increased allocation towards schools and health facilities, as well as place a disproportionate burden on impoverished communities."