By Siphokazi Vuso
The Black Business Council (BBC) has announced its firm opposition to any hikes in value-added tax (VAT), warning that it would severely affect small businesses and the broader economy.
This comes ahead of Finance Minister Enoch Godongwana’s tabling of the National Budget on Wednesday, following its postponement due to disagreements on a VAT increase.
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The proposed hike has sparked concern over its potential impact on operational costs, pricing and consumer spending.
Black Business Council CEO Kganki Matabane said raising VAT would increase the cost of doing business, particularly for small enterprises already facing numerous challenges.
“We won’t support any increase in VAT because it affects everyone, and it will raise the cost of doing business. Small businesses, already strained by limited access to funding and markets, will be particularly affected,” he said.
Matabane added that a VAT hike would make products and services less affordable for consumers, leading to higher unemployment rates.
“Small businesses are job creators, and more jobs will be lost as a result. We cannot afford this given the state of our economy,” Matabane said.
Institute of Race Relations researcher Anlu Keeve echoed the same sentiments, saying small businesses were already stretched thin and could not afford any additional financial burdens.
“The initial proposed VAT hike from 15% to 17% is like a kick in the teeth for small businesses. With the economy barely growing at 1% a year and anti-investment policies adding pressure, small business owners are scraping by on razor-thin margins. They can’t handle higher taxes
that’ll eat into their profits and affect their customers,” Keeve told Vutivi News.
“A smaller VAT hike might still happen, but if they don’t cut out the wasteful expenditure, little change will be made to the sustainability of the budget over the long term. Small businesses don’t need a budget that kicks them while they’re down.
“The Treasury’s got to show us a government that’s ready to stop leaning on the little guy and start making the hard calls.”
During a pre-budget briefing, Standing Committee on Public Accounts (SCOPA) chairperson Songezo Zibi warned that government money should be spent carefully and efficiently.
“The conversation between the executive and Parliament needs to change so that we can save money. These savings should then be redirected toward development and economic growth, rather than asking the minister to borrow more,” Zibi said.
“I think what we are likely to see when this budget is tabled is yet another call to spend money efficiently. I sit on the Standing Committee on Public Accounts, and I chair it. Members keep asking what the Auditor-General and the Treasury are doing to cut waste.
“But there is a reason why ministers are members of the executive; it is their responsibility to make sure that government money is spent responsibly.”
