"We had no choice," Gigaba justifies VAT increase

"We had no choice," Gigaba justifies VAT increase

- Malusi Gigaba's Budget speech is over and the country is reeling at news of a VAT increase

- Gigaba justified the increase by saying that the country has left VAT untouched for 20 years

- He said that government will find R57 billion to fund free education

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The VAT increase by one percent is set to increase South Africa's revenue intake by almost R20 billion, a huge increase which Finance Minister Malusi Gigaba said was long overdue.

This is in spite of the fact that VAT has not increased for 20 years, and the increase from 14% to 15% is going to hit the poor the hardest.

Gigaba has defended Treasury's decision to increase value added tax, and said that the poor will be protected by zero-rated food items.

Gigaba revealed a R1.67 trillion budget on Wednesday, with the VAT increase raising the ire of most South Africans, including opposition parties.

READ ALSO: Opposition: Protect the poorest from Gigaba's budget changes

Briefly.co.za learned Gigaba is going through the changes to budget at a post-Budget briefing in Cape Town, on Thursday.

On the back of the VAT increase, is the news that Treasury will now hold back on some of its capital projects and reduce spending to find the R57 billion to fund education.

Gigaba said his department took the decision to implement free higher education for the poor and working class to avoid another student protest.

The Minister added that students must understand that the money will come from taxpayers and they will be expected to pass.

"We need to be very blunt because this is a lot of money. The people of South Africa are going to pay to educate our children. Like I say with my own children, that I'm spending a lot of money sending you to school, I want you to pass, I'm not giving you the option to fail," Gigaba said at the briefing.

READ ALSO: EFF rejects budget speech and calls on Ramaphosa to remove Gigaba

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Source: Briefly.co.za

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