South Africa’s tourism industry has welcomed the government’s decision to delay the budget speech and suspend plans for a contentious 2% increase in value-added tax (VAT). The move has ignited critical discussions on the economic impact of higher taxes on travel and hospitality.
According to IOL, industry leaders have expressed concerns that a VAT hike would significantly affect domestic tourism and inbound travel, potentially diminishing South Africa’s reputation as an affordable destination.
‘South Africa has always been regarded as a value-for-money destination, offering an incredible travel experience at competitive prices. This has been one of our greatest selling points in attracting international visitors,’ said David Frost, CEO of the South African Tourism Services Association (Satsa).
He warned that increasing VAT would erode this advantage, making South Africa less attractive to cost-conscious global travelers. ‘If South Africa becomes significantly more expensive due to higher taxes, they will simply choose other destinations that offer better affordability.’
Rosemary Anderson, National Chairperson of the Federated Hospitality Association of South Africa (Fedhasa), echoed these concerns, calling the proposed increase “devastating” for the hospitality industry.
‘Adding another tax burden will force many businesses—especially small and independent operators—to either absorb the cost at the expense of their survival or pass it on to consumers, making travel and dining out even more unaffordable,’ Anderson said.
Both Frost and Anderson emphasized the need for alternative policies that promote tourism growth, such as tax incentives for businesses investing in the sector.
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