- Finance Minister blames fee-free education as one of the reasons for 1% VAT increase
- The fee-free higher education policy was introduced by Zuma last year in a desperate attempt to remain in power
- Due to public criticism, the ANC has had no choice back to continue backing the policy
Finance Minister Tito Mboweni has blamed fee-free higher educations as one of the main reasons for the VAT ( Value Added Tax) increase earlier this year.
Ex-president Jacob Zuma announced the introduction of this policy just before the ANC’s elective conference in December 2017, a desperate attempt to remain in favor. At this conference, he lost power to current president Cyril Ramaphosa.
Widespread criticism of the ANC ( African National Congress) forced the party to back the former president's bill which called for fees to be dropped when it came to higher education.
Mboweni made the statement in response to the debate on the tax bill dealing with the increase to 15% in VAT. He reminded MP’s of basic economics: if you want to spend more, you need more money.
The ANC was blamed for mismanaging the economy and for allowing the state capture to steal billions from the public, at the same time SARS suffered under the poor leadership of Tom Moyane, the former commissioner.
“There have been some major adjustments to the expenditure side of the budget which need to be financed - in particular, the free higher education. So, when you introduce such a large expenditure item, you have to find the revenue to fund that.
“If you don’t understand that inter-relationship, then we’re in a difficult conversation, where you might argue that you want less taxation, but you want higher expenditure. The two don’t go together.”
The need to fund higher education came at a time when the economy was suffering low growth and government debt was skyrocketing, placing great strain on the public’s purse.
The worn out minister, whose absence from some key debates and question-time was noticeable, said that the VAT increase was due for a review in June 2021. This review would determine the effectiveness of the tax hike.
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