Consumers Already Struggling Under Financial Pressure
Neil Roets, CEO of Debt Rescue, has warned that increasing VAT would be devastating for consumers who are already struggling to afford essentials like food, transport, and electricity. “A VAT hike in the current economic climate would be catastrophic. Consumers are drowning in debt, and increasing VAT would push them into even further financial distress,” he told Business Report.
Lower-Income Households Will Suffer the Most
A VAT increase would hit lower-income households hardest, as they already spend most of their income on basic necessities. Unlike income tax, which adjusts based on earnings, VAT is a regressive tax that affects all consumers equally. With food prices already soaring, higher VAT would further erode purchasing power, making it even harder for families to manage their expenses.
Debt Rescue Sees Record Numbers of Over-Indebted Consumers
Roets noted that Debt Rescue is witnessing record-high numbers of over-indebted consumers relying on credit just to survive. Roets believes the government has two options: cut state spending and implement measures to grow the economy, rather than placing the burden on struggling South Africans.
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