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Explainer: What's next for South Africa's budget and planned VAT hike?

South Africa's lawmakers will scrutinise the 2025 budget in the coming weeks, with amendments not ruled out as political parties weigh up a contentious plan to raise value-added tax.
The article from MSN discusses the upcoming South African budget presentation by Finance Minister Enoch Godongwana, scheduled for November 1, 2023. Amidst economic challenges like slow growth, high unemployment, and a significant budget deficit, there is speculation about a potential increase in Value Added Tax (VAT) from 15% to 16%. This hike is considered as a measure to address the country's financial woes, including a ballooning public sector wage bill and the need for infrastructure investment. However, increasing VAT is politically sensitive due to its regressive nature, disproportionately affecting the poor. Alternatives like raising personal income tax or cutting government spending are also on the table, but each comes with its own set of economic and political challenges. The article outlines the government's dilemma in balancing fiscal responsibility with social equity, highlighting the potential impacts of these fiscal decisions on South Africa's economic recovery and public sentiment.

Read the Full Reuters Article at:
[ https://www.msn.com/en-us/news/world/explainer-whats-next-for-south-africas-budget-and-planned-vat-hike/ar-AA1B5J5R ]