South Africa is on edge as the uMkhonto weSizwe (MK) Party has threatened nationwide protests if the revised budget, set to be presented on Wednesday, 12 March, includes an increase in Value Added Tax (VAT). The warning comes amid heated debates over how to address the country’s fiscal challenges without exacerbating inequality and economic hardship for millions of low-income households.
The VAT Hike Proposal
In the initial budget proposal, Finance Minister Enoch Godongwana suggested a two-percentage-point increase in VAT to raise R60 billion for critical government expenditures. These include salary increases for civil servants, infrastructure projects, school feeding programs, early childhood development initiatives, and an extension of the Social Relief of Distress (SRD) grant.
However, the proposal faced significant opposition, leading to the unprecedented cancellation of the February budget speech. Reports suggest that the government of national unity (GNU) has since agreed to a smaller VAT hike of 0.5 percentage points. Yet, the Democratic Alliance (DA) has denied any agreement, stating that negotiations are ongoing.
MK Party’s Strong Opposition
The MK Party has emerged as a vocal opponent of the VAT hike, arguing that it would place an unbearable burden on the poor. Mzwanele Manyi, the party’s parliamentary whip, warned that South Africa “would be brought to a standstill if the government proceeds with a proposed increase in value-added tax (VAT).”
Thanti Mthanti, chairperson of the MK Party’s National High Command Economic Transformation Sub-Committee, echoed this sentiment, stating that the tax hike would worsen inequality and economic hardship. “This targets poor people,” Mthanti said. “The minimum wage in this country is about R4,500, and most of that is spent on transport and food.”
Mthanti dismissed the Finance Minister’s justification for the increase, calling it a “self-serving argument based on incompetence.” He argued that the SRD grant was already budgeted for and accused the Treasury of using the issue to shift the burden onto vulnerable communities.
Proposed Alternatives
The MK Party has proposed alternative measures to raise the necessary funds without increasing VAT. These include:
- Raising corporate tax by one percentage point.
- Introducing a wealth tax for the top 1% of earners.
- Strengthening the South African Revenue Service (SARS) to reduce the R800 billion tax gap.
Mthanti emphasized that South Africa’s fiscal crisis stems from a lack of economic growth, not excessive spending. “If the South African economy had grown at 3%, we’d have no fiscal crisis,” he said.
Threat of Nationwide Protests
The MK Party has warned that it will mobilize mass protests if the VAT hike is implemented. “We will bring the country to a halt,” Mthanti said, underscoring the party’s determination to protect low-income households from further economic strain.
The threat of social unrest adds to the already tense political climate, with the ANC-led government facing pressure from both opposition parties and the public. The DA, while opposing the VAT hike, has also criticized the ANC for failing to accept its terms in budget negotiations.
What’s Next?
As Finance Minister Enoch Godongwana prepares to present the revised budget on Wednesday, all eyes are on whether the government will proceed with the VAT hike or seek alternative solutions. The outcome could have far-reaching implications for South Africa’s economy, social stability, and political landscape.
For now, the threat of nationwide protests looms large, highlighting the delicate balance between fiscal responsibility and social equity. As the debate continues, one thing is clear: the decisions made this week will shape South Africa’s future in profound ways.
Follow Joburg ETC on Facebook, Twitter , TikTok and Instagram
For more News in Johannesburg, visit joburgetc.com