VAT hike is proof SA leaders don’t have a clue

Let’s be honest about this VAT hike; nobody has an idea what’s going on.

There are some things called fiscal framework, a committee, a parliament and a budget and somehow those things were all run through some artificial non-telligence which spat out a VAT increase so that South Africa can finance its biltong flavour research or whatever it is our government does.

Add to the confusion a SACP bent on avoiding a VAT increase but scolding the primary party fighting against the increase as being neo-liberal and proposing austerity. Then there’s the ActionSA lot who boasted that they have stopped the VAT hike only for us to be told that they somehow did it by voting in favour of the VAT hike and hope to block it within 30 days… somehow.

Call me protestant but I don’t think that praying Hail Mary for the next four weeks is going to do the trick. And the mea culpa could be devastating to everybody; if the ANC cuts the DA out and expects support from ActionSA to compensate, they’d first need to hand Herman Mashaba a wet wipe for that egg on his face. After that, a tender will probably go out to amend the performance tracker on ActionSA’s website since the supply of eggs is not infinite.

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VAT has been around in some form since 1978 in its previous iteration of General Sales Tax and it’s never been popular among people who, you know, buy things. Yet some are very eager to push it. Perhaps they like the idea of the rich getting hit harder. Maybe there is some satisfaction in knowing that the state will have more money to play with. It could be that they’ve just lost hope and are grateful that the government hasn’t pushed it even higher. I’m just grateful that the state lacks taxation creativity and hasn’t thought to taxing the use of WhatsApp… or putting a tariff on speaking English.

But even with the increased state revenue through raising VAT, President Cyril Ramaphosa’s counterpart in the US seems to have had it with his people buying things from us and those tariffs could make for some interesting results.

But that’s the short-sightedness of our leadership and why it was such a ridiculous idea to increase tax revenue through VAT. VAT follows the heat of the market. If there’s no trade, you could place VAT at any percentage and you wouldn’t get anything. The success of VAT revenue is directly proportional to the success of trade.

Sure, internationals can get VAT refunds anyway so it may not seem like spannering foreign trade is so terrible but spare a thought for the companies who rely on internationals for a portion of their revenue and may have to go bust if that goes away.

This is why economic growth is vital. Without it, the returns through VAT will diminish and we’ll be stuck in a loop of increases because the underlying support structures to make VAT viable just aren’t there.

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There’s a favoured ideology of inclusive growth and that’s wonderful. Wouldn’t it be great if we had any meaningful growth to be inclusive? What was driving some of the most promising growth figures we’ve had since 2010? Probably the GNU. But now that seems to have gone to pot and as for the poor, guess what? They’re still poor and the stuff they buy just got more expensive.

Weirdly, I think that’s a massive part of why the ANC lost support. People could start feeling that what they were doing wasn’t working so to double down and keep doing more of the same is a strange strategy but, like the DA, they are a party of their own convictions.

If only they could find alignment on their convictions and do things that actually make life better. Taxpayers clearly don’t mind paying. They’ve been doing it. I think they merely mind when they find that their money isn’t going to making South African life better but rather the pit of increasingly expensive empty promises. Public healthcare was a great idea and had lots of money but then… and now we need NHI apparently.

Nah, South Africa. The dream was nice. Now we need some forward thinking genuine leadership. Until then, VAT so!

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