Parliament has just released a statement saying that in view of the strong feelings about the VAT increase, the Standing Committee on Finance and Select Committee on Finance are considering holding public hearings on the Rates and Monetary Bill within the next few weeks, rather than in November, when the Bill is normally voted on each year.
The one percentage point increase in VAT, as announced in the 2018 Budget Speech on February 22, left the industry in turmoil, with tourism game players speaking out against the lack of consultation and preparation for this adjustment in such a short time frame.
In terms of the Money Bills Amendment Procedure and Related Matters Amendment Act, both Houses of Parliament have to finalise the fiscal framework within 16 days of the Budget being introduced to Parliament, due to the tax year commencing on March 1, and the financial year on April 1, each year.
Parliament’s decisions on the VAT increase are managed through the fiscal framework, and the Rates and Monetary Amounts and Amendment of Revenue Laws Bill. Chairpersons of the Standing Committee on Finance, Yunus Carrim, and the Select Committee on Finance, Charel de Beer say: “We are, in fact, in the final stages of amending the Money Bills Act to give both the public and Parliament more time to process the Budget. Understandably, there is significant opposition to the 1% increase in VAT. In terms of the Value Added Tax Act, a VAT increase comes into effect on the date the Minister announces this in the Budget. In this case, April 1 this year. Parliament has 12 months within which to accept, reject or amend the increase in some other way within 12 months.”
The decision to hold talks earlier will allow the public more time to make considered submissions on the VAT increase during the hearings on the Rates and Monetary Bill. However, Carrim and de Beer say that, should Parliament reject the VAT increase, alternative sources would need to be found to fill the R22.9bn (€1.6bn) gap that the VAT increase would have generated.
