Samkelo Magongo is a 4th year student studying a B.Ed in Secondary Business Studies. The document defines VAT as a consumption tax added to the sales price of a product that represents a tax on the value added to a product throughout its production process. It lists the key objectives of VAT as increasing government revenue, avoiding cascading effects of taxes, transparency in tax systems, reducing tax evasion, and preventing distortion in trade. The advantages are that VAT is easier to manage than other indirect taxes and generates constant revenue as long as consumption exists. Disadvantages include VAT being expensive to implement and difficult to calculate value added at each stage. The document discusses why VAT increased in South Africa and may increase in Eswat

1.  Samkelo Magongo
 153469
 B.ED SECONDARY BUSSINESS STUDIES YEAR 4

2. VAT
 VALUE ADDED TAX

3. What is VAT?
VAT is a consumption tax added to a
product's sales price.
It represents a tax on the "value added"
to the product throughout its production
process.

4. Objectives of VAT
1. To Increase Government Revenue
- The primary purpose of VAT is to raise revenue to meet public
expenditure since most government activities are financed by taxation.
- VAT develops a stable source of government revenue.
2. To Avoid Cascading Effect
- VAT also aims to remove the cascading effect of taxes and levies, which is
generally prevailing in other types and manner of levy.
- A cascade effect is an inevitable and sometimes unforeseen chain of events
due to an act affecting a system.

5. …continued
3. Transparency
– VAT makes the tax system more transparent. This is to say that
there is easy compliance and procedures through transparency.
4. To Reduce Tax Evasion Practices
5. To prevent distortion in trade and economy through uniform tax
rates.

6. Advantages
 Compared to other indirect tax, VAT is easy to
manage
 As VAT is a consumption tax, the revenue generated
will be constant. For as long as there is consumption
of goods and services, revenue from VAT will be
constant
 Due to the catch up – effect of VAT, it minimizes
avoidance

7. Disadvantages of VAT.
 As the VAT is based on full billing system, VAT
implementation is expensive
 It is not easy to calculate the value added in each
and every stage, thus VAT is difficult to understand.
 VAT is regressive in nature, thus affecting mostly the
low income earners as they spend most proportion
of their income

8. WHY V.A.T INCREASED IN SA?
They wanted to finance there so called
free tertiary Education.
Also the government of South Africa
wanted to increase grants by at least
R100 per person

9. Why the proposed increase V.A.T in
eSwatini?
 eSwatini’s Economy is dependent on
South Africa
We import over 70% of our products
from South Africa

10. For example goods subjected to VAT

11. Negative effects of an increase in V.A.T in
Eswatini
 V.A.T is regressive tax, the poorest members
of society may end up spending more of their
income on V.A.T than the wealthiest.
 Inflation, higher V.A.T rates may lead to
higher rates of inflation as cost of goods and
services rises.

12. “The ANC cannot make the poor pay for their looting of
public money ,and we will fight this increase in V.A.T on
behalf of the poor and the unemployed” Mmusi Maimane