By Thapelo Molefe
The Budget speech has been met with widespread condemnation, with critics warning it could deepen poverty and cripple economic growth.
At the heart of the storm is the controversial VAT hike, seen by many as an attack on the working class while leaving the wealthy and big corporations largely untouched.
With South Africa facing a 32.8% unemployment rate and sluggish economic growth, the Budget has fueled a political battle that could define the country’s economic and political trajectory for years to come.
The Congress of SA Trade Unions expressed “extreme disappointment”, particularly condemning the proposed 0.5% VAT increase in both 2025 and 2026.
“These tax hikes will now make the lives of millions even more difficult,” said Cosatu Parliamentary coordinator Matthew Parks. He called on Parliament to reject the increase and instead pursue more progressive revenue measures.
While Cosatu welcomed the expansion of zero-rated VAT items to include additional essential food products, it insisted that “sanitary pads and school supplies should also be included”.
It further criticised the government for underfunding the SA Revenue Service (SARS), arguing that “allocating more resources to tax collection efforts would be a more effective and fair way to raise revenue”.
Opposition parties across the spectrum voiced strong disapproval of the Budget.
The Economic Freedom Fighters outrightly rejected it termed a “right-wing neoliberal budget”, claiming it favoured corporate interests at the expense of the poor and working class.
“We will not support any form of increase on VAT,” declared EFF leader Julius Malema.
“Let the corporate tax be increased, let there be tax on the wealthy people of South Africa who buy buffaloes for R22 million.”
The EFF further criticised the Budget for failing to address economic transformation.
“The Minister of Finance has unashamedly handed over government fiscal policy to the parasitic white capitalist establishment,” said party spokesperson Sinawo Thambo.
“South Africa needs economic policy that will guarantee full employment and grow the productive sector of the economy.”
The party also lambasted the government’s approach to state-owned enterprises (SOEs), arguing that “the National Treasury is just continuing with its misguided operation to decapitate the strategic state-owned companies”.
The EFF accused the government of deliberately starving SOEs of funding while prioritising the interests of the private sector.
“Beyond the privatisation of strategic services, the National Treasury is continuing with the deliberate sabotage and collapse of SOEs, refusing to provide much-needed funding while calling it a bailout.”
EFF leadership also rejected claims that a VAT hike would lead to sustainable revenue collection.
The MK Party, led by John Hlophe, also rejected the Budget, arguing that it disproportionately harmed black South Africans.
“The people who are going to suffer most are black people. These are the people who pay VAT, and we are going to suffer most,” Hlophe asserted.
He urged the government to consider alternative revenue sources such as a wealth tax and increased corporate taxation.
He further accused the government of failing to explore alternative revenue sources.
“We have a number of options. Wealth tax, for example, is very important. There are many tycoons here who should be paying wealth tax. There is no reason why we should not increase corporate tax,” Hlophe stated.
“Capacitate SARS and make SARS better able to collect revenue. There are so many people who are getting away with murder who are not paying their tax. That, in our considered view, would generate a lot of revenue as opposed to increasing VAT by 0.5 percent, which no doubt will affect so many people, particularly the poorest of the poor.”
Hlophe dismissed the argument that increasing corporate tax would scare off investors.
“We’ve heard those lies before. Wealth tax can be increased. There is no way investors will run away because they need to invest in South Africa. Those who threaten to pull out, we know they will not withdraw from South Africa.”
The leader of Build One South Africa, Mmusi Maimane, warned that the VAT increase, coupled with the failure to adjust personal tax brackets, amounted to “double taxation” on working-class citizens.
“You are asking teachers, lawyers, nurses, all citizens to now be paying more tax,” Maimane said. “What ultimately we need is a growth plan.”
Athol Trollip of ActionSA criticised the government for failing to propose necessary economic reforms, including reducing the size of the cabinet and tackling corruption.
“The only reason we can’t grow this economy is because our country is corrupt. It’s perceived to be corrupt. There’s no property security, and those are the issues that drive away investment,” he argued.
“We will not be able to vote for this budget because there’s no change, there’s no policy reform.”
Despite the criticism, the United Democratic Movement and the ANC defended the Budget, citing difficult trade-offs due to revenue constraints.
ANC first deputy secretary-general Nomvula Mokonyane said: “We have to welcome the tabling of the Budget. It is now subjected to parliamentary processes.”
She said that infrastructure spending “is going to contribute towards inclusive growth and the creation of new jobs”.
Some economists voiced concern that the VAT hike and failure to adjust tax brackets would slow consumer spending and weaken economic growth.
Solidarity described the tax proposals as “unacceptable,” with economic researcher Theuns du Buisson warning: “This increase will push struggling households to the breaking point.”
He further criticised the government’s handling of the tax system.
“It seems as if the Finance Minister is trying to turn the middle class into poor people as well,” Du Buisson said.
SARS commissioner Edward Kieswetter acknowledged concerns over tax collection, noting that SARS has identified 156,000 individuals and businesses who should be paying taxes but were not.
“We have discovered over 30,000 individuals who have economic activity but are not registered,” he explained.
“Better tax enforcement, rather than increasing VAT, is a more sustainable solution.”
One of the few broadly welcomed measures in the Budget was the increase in social grants, which will benefit 19 million recipients.
However, Cosatu and other critics slammed the government for failing to increase the Social Relief of Distress grant, calling it “an abomination”.
Additional funding for education, healthcare, and security services was acknowledged as a positive step, but critics demanded more details on implementation timelines.
The government’s decision to maintain funding for Eskom, Transnet and Prasa infrastructure was seen as necessary but insufficient to address broader economic inefficiencies.
While the Treasury defends the tax proposals for funding essential services, trade unions, and opposition parties warn of economic hardship and declining consumer confidence.
The battle over the Budget is set to continue in Parliament, where amendments may be proposed before final approval.
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