Trade unions reject the proposed 2% VAT increase

The two major trade union federations have rejected the proposed 2% increase in value-added tax (VAT), saying it ignores the plight of the poor and indicates the ANC has been sucked into a neoliberal agenda.

Civil society organisation the United Democratic Front (UDF) added its voice, saying the VAT hike indicated the ANC no longer cared about the poor, who would be hardest hit.

The increase was expected to be announced in Finance Minister Enoch Godongwana’s budget speech on Wednesday.

However, the speech was postponed to 12 March due to disagreements among government of national unity parties over the VAT hike.

Budget speech postponement welcomed

Cosatu’s parliamentary coordinator Matthew Parks said the federation welcomed the budget speech postponement and indicated it was partly due to Cosatu’s pressure in opposing the hike.

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“It is better that the government experiences some badly needed humbling and goes back to the drawing board, than to have rushed a budget that would not only have been rejected in parliament, but also potentially create a constitutional crisis.”

Parks said the budget would have been an unbearable burden upon working-class families who were already heavily in debt, battling to cope with the rising costs of living and whose meagre wages had not kept pace with inflation.

“A 2% VAT hike makes the price of all goods much more expensive. Workers are already struggling to cope with the rising cost of living, above-inflation hikes for electricity, transport and food as well as municipal rates.

“Their meagre wages have, in many instances, not kept pace with inflation. Workers earn little and have no room to spare to cope with a VAT hike,” Parks said.

South African Federation of Trade Union (Saftu) general secretary Zwelinzima Vavi said the move showed that the ANC had been hijacked from the working class and the black majority.

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Burden on working class

“The ANC’s plan to increase VAT was a blatant attempt to force workers to fund their own development or, worse, to shift the burden of the capitalist crisis onto the backs of the working class,” Vavi said.

Saftu had warned the working class and the poor to expect yet another anti-worker and anti-poor 2025 budget from Minister of Finance Enoch Godongwana.

“This budget will deepen budget cuts, undermine public services and entrench the neoliberal economic agenda that has left millions of South Africans in poverty and unemployment.”

UDF spokesperson Mota Motapa said the increase would further lower the standard of living.

“The UDF urges all progressive democratic movements to reject with contempt any suggested changes to the budget that will lead to further suffering of the poor.”

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