• Dawie Roodt warns a VAT hike above 15% could happen soon because the government can't raise personal or company tax any further.

• Business group Lula says small businesses already face high costs and red tape, and higher VAT will make life even harder.

Economist Dawie Roodt has warned that the government may soon raise VAT again, saying it's running out of ways to collect money.

Finance minister Enoch Godongwana will deliver the Medium-Term Budget Policy Statement on Wednesday, 12 November, as the country debates possible tax changes.

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Roodt said the government can't raise personal or company tax any more because people are already paying too much. Most income tax comes from a small group of taxpayers, and raising it again would push many to leave or stop paying, BusinessTech reported.

"The government is desperate for money," said Roodt. "VAT is the only option left."

He said cutting government spending would be "political suicide" for the ANC, which means a VAT hike may be the easiest way to raise cash.

"Once the government introduces a 'temporary' tax, it becomes permanent," he said. "I won't be surprised if they raise VAT again soon."

But business group Lula has warned that raising VAT will hurt small businesses and working families.

Lula's chief risk officer Garth Rossiter said small firms already struggle with poor power supply, transport problems and costly red tape.

He said instead of raising VAT, the government should focus on fixing infrastructure and cutting costs for small businesses.

"The biggest threat to small businesses is not resilience, it's a frozen government," said Rossiter.