SACP and ActionSA reject proposed VAT hike ahead of 2025 Budget Speech

As the Finance Minister Enoch Godongwana prepares to table the national Budget on Wednesday, February 19, several political parties have voiced their opposition to potential increases in Value-Added Tax (VAT). 

The South African Communist Party (SACP) and ActionSA are among the key critics, accusing the government of failing to prioritise the needs of the working class while continuing to bow to the interests of the wealthy elite. 

The SACP has firmly rejected any proposed increases, arguing that it disproportionately impacts the working class and the poor.

"Increasing VAT is a regressive tax that falls hardest on those already enduring economic deprivation," said Alex Mohubetswane Mashilo, the SACP's national spokesperson.

The party also points to the government’s commitment to addressing the cost of living crisis in its May 2024 election manifesto, which emphasizes "food security, including through VAT exemption on essential items," as an alternative to increasing VAT.

The SACP's alternative approach calls for a wealth tax and a more progressive tax system that targets the wealthy, aiming to fund public services and address the high levels of inequality in the country.

 "An effective recovery programme, particularly one targeting greater inclusivity and cutting unemployment and poverty, would generate more resources for the fiscus," Mashilo said, emphasising the importance of equitable distribution and economic justice.

In line with the SACP's stance, ActionSA also opposes any tax increases, arguing that the government must first address corruption and waste before burdening South Africans with higher taxes. 

ActionSA Member of Parliament (MP) Alan Beesley, argued, "South Africans cannot be expected to shoulder higher taxes whether VAT, personal income tax, or company tax while state corruption and mismanagement continue unchecked."

Beesley highlighted the government's lavish spending, including millions spent on travel and meetings while critical services and social programmes are neglected.

The SACP’s position on austerity also draws attention to the historical failure of neoliberal policies.

They argue that cutting government expenditure, particularly social and developmental programmes, has exacerbated the country's deepening inequality and poverty.

"Austerity often unleashes a vicious cycle," Mashilo stated, warning that such measures ultimately harm the very people they are meant to support.

Both the SACP and ActionSA argue for policies that address South Africa's triple crisis of unemployment, inequality, and poverty. In particular, they call for significant investments in industrialisation and job creation, with the SACP stressing the importance of a state-led economic recovery.

Additionally, the SACP demands that the budget prioritise the National Health Insurance (NHI) and a universal basic income grant to provide relief to millions of impoverished households.

Meanwhile, GOOD Party has put forward a plan for zero-based budgeting, which would require the government to reevaluate every expense, starting from scratch, rather than using the previous year’s budget as a base.

GOOD's secretary-general, Brett Herron, emphasised that this approach would free up much-needed funds to address basic socio-economic needs like clean water, affordable housing, and public transport.

“The only way to make such choices is through chucking out the business-as-usual approach to budgeting,” Herron said, suggesting that the government must focus on addressing the dire needs of South Africans stuck in poverty.

The call for a Basic Income Grant (BIG) is another point of unity across the opposition parties.

Herron argues that South Africa can afford a BIG by adjusting its budgetary priorities.

"The money is in the system, but it’s directed elsewhere," he said, stressing that the country has a constitutional obligation to provide for the basic needs of its citizens. This includes ensuring that every South African has access to food, shelter, and social services.

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