The REAL cost if May 2025 VAT increases go ahead
Should May 2025 VAT increases go ahead, it could cause long-term damage to the economy. This includes killing jobs and reducing overall government revenue, not increasing it. According to NAMC's modelling, not only will May 2025 VAT increases bring in less money than expected, but over time it will have negative secondary effects on various industries.
As such, NAMC estimates real GDP will fall by 0.21 percentage points and significantly reduce household spending. Next, while VAT collection will increase, other forms of tax revenue collection will likely fall due to lower disposable income. In turn, this will lower Personal Income Tax (PIT) collections, something NAMC calls the 'general equilibrium effect.'
Therefore, if May 2025 VAT increases go ahead, higher income expenditure elasticities are bound to be hardest hit. These include vehicles, electronics, other household luxury consumables and real estate transactions subject to VAT. Basically, the National Treasury can't have its cake and eat it, too …
The Finance Minister has also increased excise on alcohol and tobacco products – the so-called 'sin tax.' But here, too, any short-term increase in revenue collection jeopardises long-term prospects of the industry. A 6.8% increase in excise duties on alcohol is expected to have ripple effects across the wine and brandy industries.
NAMC estimates an additional R1 billion in revenue will be offset by losses due to lower economic activity and disposable income. 'Our simulation suggests that for every R1-billion increase in excise duties collected due to higher tax rates, other tax revenue collected may fall by around R0.25 billion,' says NAMC.
Therefore, at an industry level, the excise duty increase could result in the beverage industry's sales falling by 0.3%. South Africa's beverage industry contributed 3.6% (R226.3 billion) to South Africa's GDP. And the industry employs approximately 500 000 people.
Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1.
Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Citizen
27 minutes ago
- The Citizen
Dream big, win bigger: R10 million in amplified prizes up for grabs with Cell C!
At Cell C, nothing should stop you from dreaming big and winning bigger! Cell C is giving South Africans 10 million reasons to stay connected with the return of its thrilling Win Big campaign – Amplified! Why settle for small wins when you can have amplified ones? Cell C is cranking up the volume on rewards – from instant prizes to R100,000 in cash, this campaign is designed to change lives. Whether you're recharging, upgrading, or signing up, every move you make brings you closer to winning life-changing rewards from instant vouchers to R100,000 in cash. This year's Win Big campaign is bigger and better across every touchpoint, with over R10 million in prizes up for grabs across national, regional, in-store, and radio platforms. Here's how to Win Big – amplified style: Recharge, upgrade, or sign up — each action is an entry. Score instant vouchers and weekly in-store wins of R1,000. Win big with cash prizes of up to R100,000 — and possibly your contract for life! And there's more! Radio listeners nationwide can send voice notes or WhatsApps to participating stations, sharing what they dream of winning. The most moving and creative entries stand a chance to win up to R10 000 — with bonus cash for both new and loyal Cell C customers. Whether you're prepaid, postpaid or Fibre, new to the network or a long-time customer, now's the time to make your dreams come true. At Cell C, nothing should stop you from dreaming big and winning bigger! Ready to amplify your chances of winning? Visit your nearest Cell C store, dial 084 145, or go to to sign up, upgrade, or recharge and stand a chance to claim your share of R10 million in prizes. Visit for more information. T&Cs Apply
IOL News
3 hours ago
- IOL News
DA still mum on axed Andrew Whitfield's replacement
The fired deputy minister of Trade and Industry, Andrew Whitfield. Image: DTIC THE DA has yet to submit a replacement name to take over axed Deputy Minister of Trade, Industry and Competition, Andrew Whitfield, the Presidency confirmed on Thursday. Whitfield was shown the door with immediate effect last week for taking a trip to the US without Ramaphosa's permission. The reasons for the trip remain unclear, and both Whitfield and the DA did not respond to questions on Thursday. In dismissing Whitfield, Ramaphosa had noted that 'his travel to the United States was a clear violation of the rules and established practices governing the conduct of Members of the Executive. This requirement is known to all Ministers and Deputy Ministers. These rules and established practices were expressly communicated to all members of the Executive during the induction sessions at the commencement of the 7th administration'. Asked about Whitfield's intention for visiting the US and how significant this was in the decision to remove him from cabinet, Ramaphosa's spokesperson Vincent Magwenya would only say: 'The President has made his decision, the matter is done. There's no further explanation or debate that's going to alter that decision. The President is still waiting for a replacement name from the DA that he will consider.' The DA did not respond to questions on why Whitfield had travelled to the US and whether the party supported his trip. Weighing on the matter, international relations expert Siseko Maposa, from Surgetower Associates Management Consultancy, suggested that the trip may have been influenced by the strained relations between the United States and South Africa at the time, as well as the DA's parallel attempts to negotiate independently, possibly through ex parte channels. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ 'We can certainly engage in speculation about the motivations behind Former Deputy Minister of DTIC Whitfield's travels, particularly given the strained US-SA relations at the time and the DA's parallel efforts to negotiate ex parte,' Maposa said. 'One might even reasonably consider whether Ramaphosa deliberately ignored Whitfield's authorisation request precisely to deter the DA's efforts aimed at gaining an independent diplomatic channel with the US administration – we can't be sure.' He said the more substantive issue transcends party squabbles, it speaks to the 'erosion of statecraft' in South Africa. 'When deputy ministers traverse borders without authorisation, it undermines the coherence of governance and, ultimately, the sanctity of statehood itself. This shouldn't be about ANC or the DA – it ought to be about whether South Africa's leadership, across factions, grasps the gravity of disciplined state function. If the DA truly internalised this principle, its opposition to Ramaphosa's decision would likely be more measured. "Deeper still, this episode exposes the GNU's fundamental flaw: a coalition pulling in opposing directions, lacking a shared framework for negotiation, and failing to distinguish between government (the act of holding office) and governance (the art of wielding it effectively). Until this disconnect is resolved, such incidents will remain symptoms of a system in disarray.' Cape Times
The Citizen
4 hours ago
- The Citizen
First Boks store opens doors: How much a matchday jersey will set you back
The reigning world champions get their 2025 Test season underway in Pretoria on Saturday. Springbok wing Cheslin Kolbe in the new-look jersey, which is now available at the Springboks store in Sandton. Picture: Gallo Images It's a fairly costly affair being a Springbok supporter. Just days before the new Test season gets under way with the reigning world champions taking on Italy in the first of two Tests in Pretoria on Saturday (5.10pm), the South African Rugby Union has opened its first retail store in the country. The shop opened its doors on Friday morning in Sandton City. According to the rugby body, the store will carry 'official Nike replica teamwear as well as an exciting new range of off-field supporters clothing, called Springboks, designed to be worn everywhere – from the office to the braai'. The cost of a Bok match jersey Mark Alexander, president of Saru, explained the reasoning behind the new store. 'In retrospect, it is amazing that we have not had such an offering before now. Before today, if you'd asked the question 'where is the Springbok shop?' you'd have been met with blank faces. 'Famous sports teams around the world have club shops. If you're in the Champs Elysee in Paris, you can visit the Paris St Germain club shop, if you're passing through Munich airport you can visit the Bayern Munich club shop and if you're in the Old Trafford area of Manchester you can visit United's megastore. 'But if a visitor to South Africa wants to take home with him or her a memento of one of Africa's most famous sports teams where was the Springboks store? Now we have an answer.' So, what will a new-look Springbok Nike men's short sleeve matchday replica jersey set one back? A cool R2 599.95. The old-style long sleeve Nike jersey, as worn by the 1995 World Cup-winning Springbok team, will cost fans R1 799.95. A unisex Nike 'Bokke' hoodie is available for R1 399.95. Bongi Mbonambi in the 'Bokke' hoodie. Picture: Gallo Images Reason for opening a store The shop also sells a wide range of other Springbok leisurewear, from socks to T-shirts to caps and slops for men, women and children. Rian Oberholzer, the CEO of SA Rugby, said something had to be done to answer South Africa's hunger for the Springbok brand. 'The explosion of counterfeiters and imitators since 2019 has flooded e-commerce channels with fake product, borrowing from the colours and iconography of the Springboks,' he said. 'The exco recognised there was a gap in the market that others were exploiting and that there was an opportunity and a need for SA Rugby to meet that demand and retain the value for the benefit of rugby. 'The intention is that this store will be followed by others in due course.' The new store's offering is also available online at Springbok supporters gear and replica jerseys are also available at other sports retailers.
