The ANC’s alliance partners, Cosatu and the SACP, have welcomed the postponement of the Budget Speech, maintaining their steadfast rejection of increasing value-added tax from 15% to 17%.
The Budget, which was supposed to be presented in the National Assembly on Wednesday, was postponed at the 11th hour due to disagreements in Cabinet over hiking VAT and what its implications were on the government fiscus and normal South Africans.
Cosatu told Inside Politics that it was strongly opposed to any potential increase, warning that it would deepen financial hardships for workers already struggling with high living costs.
Cosatu spokesperson Zanele Sabela said the rescheduling of the Budget Speech to March was an opportunity for the government to reconsider its approach.
She emphasised that a VAT hike was unaffordable and would place a severe burden on workers, calling on the government to instead adopt revenue-generating measures that did not target the poor.
“We think the postponement is a good thing because we did warn the government not to even consider increasing the VAT rate.
“And so the fact that the Budget has been postponed means that they will go back and reconsider some of the solutions we put on the table like SARS has been asking for a R3 billion injection because when SARS gets that injection, then SARS will be able to actually bring up the tax compliance and will bring into the government coffers R60 billion,” Sabela said.
Cosatu parliamentary coordinator Matthew Parks warned that a VAT hike would exacerbate inflation, reduce consumer spending and signal that the government prioritised balancing financial figures over citizens’ well-being.
He said many South Africans were already in debt and that increasing VAT would only worsen their situation.
The SACP said the postponement was a lesson against adopting policies that disproportionately harmed the working class and poor.
SACP spokesperson Alex Mashilo reaffirmed the party’s rejection of the proposed VAT hike, warning that it would exacerbate the cost of living crisis for over 12 million unemployed South Africans, low-wage workers and those relying on social grants.
“The SACP will continue its programme for alliance reconfiguration, against the undermining of our alliance, while intensifying its independence in all respects,” Mashilo said.
The SACP criticised the government’s growing reliance on coalition partners like the Democratic Alliance.
“The pursuit of VAT hikes and neo-liberal policies, which hurt the workers and poor, coupled with building reliance on a class collaboration with right-wing parties like the DA, undermines our long-standing alliance.
“It is in this context that there was no consultation with the alliance. It is this new ideological project that suffered a major blow on Wednesday when the presentation of the Budget had to be postponed,” Mashilo said.
The party reiterated its demands for an extension of the Social Relief of Distress Grant, its transformation into a universal basic income grant, and increased funding for public services, including healthcare, education, energy, law enforcement and national defence.
Earlier in the week, the Anti-Austerity Front comprising social movements, union federations and the inter-faith forum attended the People’s Budget Assembly at St George’s Cathedral in Cape Town.
The outcomes were endorsed by the SACP and handed over to the government on Wednesday as part of a memorandum of demands.
INSIDE POLITICS
