Speaking to Reuters on Tuesday (13 March), Brian Kahn, one of the Reserve Bank’s top policymakers said that the central bank expects the hike in VAT to lift inflation by around 0.6 percentage points over the coming year, though it doesn’t expect to raise interest rates in response. "With inflation targeting, you try and look through exogenous shocks, particularly temporary ones and this is a one off," Kahn told Reuters on the sidelines of investor meetings in London, "there may be a few second round effects, it may affect wage increases in the following years, so we expect a moderate, very small increase in the following year as a result of that".
But it is something that can not be reacted to by raising rates. This rise in VAT is a big problem almost to everyone since it is going to also affect fuel prices , food prices.
For more information:
https://businesstech.co.za/news/finance/231273/vat-hike-may-affect-inflation-and-salary-increases-reserve-bank
an increase in vat is not a good thing cause it automatically makes an increase in food prices, on the other side also the salaries of worker must increase due to an increase in vat and grands must also increase.
ReplyDeletethis increase in vat is a bad thing because poor people have less to spend overall, so they need to spend larger proportion of their total income to buy what they need than wealthy people. so i think things that are essential so survival should be zero rated vat, things such as groceries and clothing.
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