Budget Showdown Looms As Vat Hike Faces Fierce Pushback

Former statistician-general Pali Lehohla believes South Africa should borrow from itself rather than turn to controversial tax hikes, including the proposed VAT increase.

He suggests tapping into domestic reserves such as pensions and the Johannesburg Stock Exchange JSE, arguing that many developed nations follow this approach.

Lehohla pointed out that South Africa has the financial resources to avoid raising taxes or taking on foreign debt. However, he said the real issue is poor governance and the risk of funds being mismanaged. 'We avoid borrowing from ourselves because we know we'll steal the money,' he said in an interview with Newzroom Afrika.

Finance Minister Enoch Godongwana initially proposed a two-percentage-point VAT hike to address a R60 billion budget shortfall. The plan sparked fierce opposition, leading to the historic cancellation of the February budget speech. The increase would help fund civil servant salary hikes, infrastructure, school feeding programs, early childhood development, and an extension of the R350 Social Relief of Distress SRD grant.

With a revised budget set to be presented on Wednesday, divisions remain. The DA and other parties strongly oppose the VAT hike, arguing that it would hit struggling South Africans the hardest. Alternative solutions, including a wealth tax, higher corporate taxes, and a pause on government pension contributions, have been suggested, but critics warn these measures could drive investors away or provide only a temporary fix, as first reported by Business Tech .