The concept of Value Added Tax (VAT) can be considered to possess a duality of sort, particularly its practical manifestation. On the one hand, VAT is a tax added to the cost of a product or service and is levied for purposes of generating revenue for government. VAT is often referred to as a tax on consumption of goods or services, and is levied on the supply by a vendor of goods or services in the course or furtherance of any enterprise carried on by a vendor. This means that VAT cannot be levied if supplies are made not in the course of furtherance of any enterprise. On the other hand, VAT is applied at each and every stage of the production which is why it is also known as a multi-stage tax. In this regard, VAT is applied to the value that is added during the production process.
The aim of this study is to determine whether the VAT increase from 14 percent to 15 percent that was effected on 1 April 2018 in South Africa is/was justifiable. In order to reach an informed and sound conclusion, three countries with a VAT system have been carefully and deliberately chosen for the purposes of comparison. The selected countries are Japan, Greece and Zimbabwe. The rationale of choosing these countries is that they are located in different continents which are Asia, Europe and Africa and this relatively allows for a (modicum of) generalisation about VAT trends across the world.
Furthermore, this research study incorporates views about the VAT increase from different schools of thought. It also explores the reasons and factors that led to the VAT increase in South Africa. In addition, it focuses on the impact of the VAT increase on the poor. The in-depth discussion on the VAT increase, the motivations that led to the increase and the impact that resulted from the increase are dealt with in Chapter 4 of the study. The findings of the study show that poor governance at the South African Revenue Service (SARS) and irregular expenditure by certain government departments led to the VAT increase. Because the factors that contributed to the upward readjustment of the VAT were within the control of the state officials, the conclusion drawn is that the 2018 VAT increase was not justifiable. Lastly, recommendations are deduced from the findings and compiled as part of the study for the benefit of South Africa and its citizenry, especially the poor.
Mini Dissertation (LLM)--Universiity of Pretoria, 2019.