JOHANNESBURG, Feb. 25 (Xinhua) -- Faced with criticism from opposition parties over an increase in value-added-tax (VAT), South Africa's ruling African National Congress (ANC) said on Sunday it will increase the list of zero-rated and tax-free items.
According to ANC Secretary General Ace Magashule, the increase in the list of zero-rated and tax-free items is meant to ameliorate the impact of a VAT hike on the poor.
Last week, the government raised the VAT for the first time in 25 years, ahead of elections in 2019.
Finance Minister Malusi Gigaba announced a 1 percentage point increase in VAT, from 14 percent to 15 percent.
The VAT hike and a plethora of other tax proposals were meant to generate an additional R36 billion (3.1 billion U.S dollars) in tax revenue, the minister said.
The South African government is saddled with a staggering 48.2 billion rand (4.16 billion dollars) revenue gap, and many economists say the minister's increasing of VAT was unavoidable.
The finance minister said the VAT hike was part of government efforts to cut deficit and stabilize debt under President Cyril Ramaphosa.
The hike in VAT has come at a time when many South Africans are struggling to put food on the table, and the country is struggling with high unemployment, a sluggish economy and high personal debt.
Opposition Democratic Alliance leader Mmusi Maimane has launched a national petition opposing the increase in VAT, warning that his party will "fight tooth and nail" against the tax increases.
Speaking at the launch in Soshanguve, Tshwane, on Saturday, Maimane said the VAT increase is "anti-poor" and that it will make even more people poor and jobless.
"Instead of cutting the fat and waste in government -- unnecessary expenditure and bloated departments -- and focusing on growth, the ANC chose to cut spending on services to poor people, including funding for housing, education, policing, and local and provincial government," Timeslive quoted him as saying.
Maimane said the increase of VAT by 1 percentage point in effect meant that South Africans would all be paying 7.14 percent more tax on everyday goods and services.
"Raising VAT and transport levies will not benefit the country," he said. "It will hit the poor and the jobless the hardest."
"Over half of our nation lives in poverty, and almost 10 million South Africans are without a job. Those South Africans should have benefitted from the budget, not been bruised and battered by it," Maimane said.
