Finance Minister set to raise VAT

South Africa’s National Treasury will use a series of measures to offset the impact on the poor from a planned increase in value-added tax, Business Day reported, without citing anyone.

The steps include increasing social-welfare grants by more than inflation, freezing the fuel levy and expanding the number of goods that are zero-rated for VAT, the Johannesburg-based newspaper reported.

The VAT rate, currently at 15%, will be raised to cover shortfalls in the education and social-wage budgets, the newspaper said.

The decision to increase the levy is being taken in lieu of taking on more debt or removing a social welfare grant introduced during the Covid-19 pandemic, it said.

Finance Minister Enoch Godongwana will give his budget speech at 2 p.m. in Cape Town on Wednesday.