Budget 3.0: Keeping VAT at 15% limits funding for new initiatives, says Godongwana

JOHANNESBURG - Finance Minister Enoch Godongwana has reiterated that keeping value-added tax (VAT) at 15% limits the government’s capacity to fund new initiatives.

When he delivered his third budget speech on Wednesday, Godongwana confirmed that the VAT rate would remain unchanged.

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Several political parties, within and outside the Government of National Unity (GNU), rejected his initial proposal to raise VAT.

Godongwana says South Africans have spoken, and the government will listen.

"This is what the past two months have provided: valuable lessons that will inform how we manage the budget process moving forward. The reality, however, is that the decision to do away with the VAT increase, without a viable alternative source of revenue, significantly reduced our ability to fund additional government programmes and projects to the extent we had deemed necessary.

"Nevertheless, this budget supports sustainable finances, the social wage and investments in economic growth," said the minister.