In a significant address during a media briefing at Chiawelo in Soweto, President Cyril Ramaphosa indicated that the recently proposed increase in Value-Added Tax (VAT) is not yet set in stone. With the National Treasury given a 30-day window to explore alternative funding options, the President emphasised that discussions are ongoing following the budget vote that witnessed opposition from parties within the Government of National Unity (GNU).Despite the uncertainty surrounding the potential VAT hike, Ramaphosa expressed an air of realism, suggesting that scrapping the VAT increase is unlikely.
“The resolution that was taken by the finance committee is that there will be a 30-day period during which Treasury will examine whether there are other options other than through a VAT increase where we can fill the gap of about R13.5 billion,” the President outlined, adding that the decision-making process will be comprehensive, taking into account all suggestions presented by various parties.
However, he noted that preliminary assessments by the Treasury have raised concerns about the viability of alternative options. “So that has been left for discussion and examination, and in the end, we will look at all ways and means of seeing whether that is possible or not. But from the current position, Treasury has looked and said at various areas where it can look, it doesn’t seem to be so,” Ramaphosa remarked, signalling the challenging road ahead for the nation’s financial planners.
The media briefing also touched upon international trade dynamics, notably the United States’ decision to impose a hefty 31% tariff on South African goods. The President was clear in his stance, asserting that South Africa will not react impulsively to these tariffs. “The US, like any other state, is a sovereign country, and they are entitled to take decisions in whichever way they want. Like ourselves, we are a sovereign country, and we can decide on many matters that have to do with international dealings,” he stated.
Ramaphosa further explained that while the imposition of tariffs calls for a measured response, South Africa will carefully assess the implications of these trade barriers. “These are issues we will be dealing with in a very responsible and very proper manner. Everything we do, we examine very carefully and look at the implications and the impact,” he added, shedding light on the government’s approach to international trade relations.This dual focus on domestic fiscal policy and international trade reflects the complex landscape facing the South African government as they navigate economic pressures and external relations, illustrating Ramaphosa’s commitment to carefully considered governance.