Bosasa Jacob Zuma ANgelo AGrizzi

A file photo of former South African President Jacob Zuma. Photo: ZUMA Press / RealTime Images

VAT increase: Four reasons why it’s all being pinned on Jacob Zuma

The spectre haunting South African politics won’t go away. Tito Mboweni has blamed the legacy of Jacob Zuma for the VAT increase.

Bosasa Jacob Zuma ANgelo AGrizzi

A file photo of former South African President Jacob Zuma. Photo: ZUMA Press / RealTime Images

In a year of unpopular decisions made by the ANC, the VAT increase has been one of the most contentious. The decision to crank it up by 1%  left many South Africans apoplectic, but Finance Minister Tito Mboweni has revealed that the ruling party don’t really have a choice.

EWN report that the rate is now “set in stone” for the foreseeable future.

Last week, a Parliamentary portfolio committee had gathered to inquire about rejecting the increase, which has been in place since 1 April this year. Value-Added Tax climbed from 14% to 15%, affecting everything from the price of groceries to the cost of fuel – something that continues to be a thorn in our sides.

Mboweni gave more detail on Tuesday on why the ANC isn’t in a position to lower VAT until at least 2021. Some of you won’t be surprised to see who is getting the blame.

Why the VAT increase cannot be reversed:

Jacob Zuma leaving his legacy

A liberator of the poor, or just someone executing a vanity project during his final few weeks as president? Jacob Zuma’s plans for free university education haven’t been as warmly accepted as he was hoping. In fact, Minister Mboweni said that the multi-billion rand policy has ended any hopes of  VAT decrease for three years.

State capture

Again, it’s Msholozi who’s getting kakked out here. Mboweni said that the “billions of rand” syphoned from state capture had battered the national fiscus, leaving them very little room to manoeuvre. The VAT hike is just one of the means the ANC say is necessary to recover stolen funds.

The Tom Moyane effect

His disastrous governance of SARS also got a mention. The tax firm is facing at least a R30 billion shortfall in revenue collection this year, and the suspended commissioner is getting the blame. Considering he was hand-picked by Jacob Zuma to help him circumvent tax payments, this one also falls on JZ’s doorstep.

Growth revision

Yunus Carrim –  Chairperson of the finance committee – also explained how the revised growth forecast for South Africa left the ANC “with no choice” but to implement a VAT rate increase.

“The pressures have become more glaring following the introduction of the Medium Term Budget Policy Statement (MTBPS), which estimated 0,7% economic growth. The MTBPS also unexpectedly forecast that there will be a R27.4 billion shortfall of revenue this financial year, which includes R20 billion of VAT returns that have been withheld.”

It’s an economic disaster with the former president’s fingerprints all over it. The cabinet clean-up hasn’t exactly been rapid from Cyril Ramaphosa though, and his attempts to kickstart the economy have so far fallen flat.