In 2018 for the first time since 1993 \u2013 the VAT was increased to 15% from the old-time 14% that we were used to since democracy. A report on Friday said Absa predicts a 1% increase ahead of the Budget speech set to be on 26 February.\r\n\u201cWe think the government will once again rely primarily on taxes to try to narrow the deficit, and in particular, we are making the bold call of a 1% rise in the VAT rate,\u201d said Absa.\r\n\r\n\r\nWith the rise of a percentage point, the VAT will then be 16%. The country is facing SOEs (such as Eskom, Telkom) dilemmas, loss of jobs, and cutting public sector payroll \u2013 this is most likely the reason for the expected VAT hike.\r\n\r\nAbsa expects the South African finance minister to increase the VAT to 16% and this will not be to adjust taxes for inflation, Absa said with other small tax adjustments \u2013 an additional R35-billion in tax revenue could be delivered.\r\n\r\nIn so doing, the government will then have enough money to help fund SOE companies such as our load-shedders, Eskom.\r\n\r\nIn October 2019, in the mini-budget, the finance minister announced R20.3bn (transfers to provinces) and R20.5bn (transfers to the government) cuts. SAA\u2019s need R2-billion to continue with its services, thus an additional R20bn cut on spending is expected to be announced,\r\n\r\nIMF has predicted a downfall in South Africa\u2019s economic growth. Absa said that:\r\n\u201cWe believe the scope for big cuts is limited, given that the government is in the middle of a multi-year pay deal with civil servants, which ends only in March 2021, and it has also promised not to implement any mandatory retrenchments,\u201d according to the same report.