State must trim its fat before punishing us with more VAT

Jacques Moolman, president of the Cape Chamber of Commerce and Industry.

The Cape Chamber welcomes government's last-minute decision to reconsider its budget priorities following contestation over a proposed 2% VAT increase.

While the postponement is likely to cause market uncertainty, the impact of the 2% hike would have been far worse. We are hopeful that government will use the delay to reformulate a budget that might stimulate economic growth, rather than impose a VAT hike that would have the opposite effect.

We applaud government's decision to pull back from the brink following contestation within its ranks over the proposed hike.

We also call on government to confront the reality of a bloated administration that absorbs an unacceptably high proportion of tax revenue. Rather than punish ordinary South Africans with yet another VAT increase, government could effect an immediate saving by streamlining its administration.

The economy urgently needs support in the form of funding for small business development and skills development. Slapping citizens with an additional VAT increase would do far more harm than good.