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Social unrest warning for South Africa
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The uMkhonto weSizwe (MK) Party has issued a stern warning to the South African government, threatening widespread protests if the revised budget - set to be presented on Wednesday, 12 March - includes an increase in the Value Added Tax (VAT).
In the original budget proposal, Finance Minister Enoch Godongwana suggested raising VAT by two percentage points to generate an additional R60 billion for the government's pressing expenditures. These include salary hikes for civil servants, infrastructure development, school feeding programs, early childhood development initiatives, and the continuation of the Social Relief of Distress (SRD) grant.
However, the proposal faced staunch opposition from the Democratic Alliance (DA) and other political parties, which culminated in the last-minute cancellation of Godongwana's February budget speech. Despite the pushback, the Finance Minister has insisted that the VAT increase is necessary to secure funding for these critical programs.
Godongwana also emphasized the need for an additional R35.2 billion to extend the SRD grant until March 2026. Following media reports, it was revealed that the government of national unity (GNU) clearing house had agreed to a smaller VAT increase of just 0.5%. However, the DA has denied these claims, stating that negotiations are ongoing and that no agreement has been reached.
As the revised budget presentation approaches, the risks surrounding the VAT increase have intensified. MK Party parliamentary whip Mzwanele Manyi warned that the proposed VAT hike would trigger nationwide protests, potentially bringing South Africa to a standstill.
According to MK Party leaders, the VAT increase would disproportionately affect low-income communities, placing an unbearable burden on the poor. Thanti Mthanti, the party's National High Command Economic Transformation Sub-Committee chairperson, told Newzroom Afrika that the tax hike would exacerbate inequality and economic hardship for millions of South Africans.
"This targets poor people," Mthanti said, pointing out that the country's minimum wage is around R4,500, much of which is spent on transport and food. "The tax hike will further strain already struggling households."
Mthanti also rejected Godongwana's argument that the VAT increase is essential to fund the SRD grant, calling it a "self-serving argument based on incompetence." He claimed that the SRD grant was already accounted for in the budget, and that the Treasury was using the issue as a political tactic to shift the burden onto vulnerable communities.
"The additional expenditure the Finance Minister is seeking to fund has nothing to do with the SRD grant," Mthanti argued. "The real issue is not a spending crisis but a growth crisis. If the economy had grown at 3%, we wouldn't be facing this situation."
Echoing Manyi's warning, Mthanti declared that if the VAT increase is included in the revised budget, the MK Party would mobilize mass protests to halt the country's operations.
The MK Party has also proposed alternative measures to raise the necessary funds without raising VAT. These include increasing corporate taxes by one percentage point, introducing a wealth tax on the top 1% of earners, and strengthening the South African Revenue Service (SARS) to reduce its R800 billion tax gap.
As the 12 March budget presentation draws closer, tensions continue to rise, with the MK Party's protest threats adding to the already intense debate over the proposed VAT hike and the future direction of South Africa's fiscal policy.
In the original budget proposal, Finance Minister Enoch Godongwana suggested raising VAT by two percentage points to generate an additional R60 billion for the government's pressing expenditures. These include salary hikes for civil servants, infrastructure development, school feeding programs, early childhood development initiatives, and the continuation of the Social Relief of Distress (SRD) grant.
However, the proposal faced staunch opposition from the Democratic Alliance (DA) and other political parties, which culminated in the last-minute cancellation of Godongwana's February budget speech. Despite the pushback, the Finance Minister has insisted that the VAT increase is necessary to secure funding for these critical programs.
Godongwana also emphasized the need for an additional R35.2 billion to extend the SRD grant until March 2026. Following media reports, it was revealed that the government of national unity (GNU) clearing house had agreed to a smaller VAT increase of just 0.5%. However, the DA has denied these claims, stating that negotiations are ongoing and that no agreement has been reached.
As the revised budget presentation approaches, the risks surrounding the VAT increase have intensified. MK Party parliamentary whip Mzwanele Manyi warned that the proposed VAT hike would trigger nationwide protests, potentially bringing South Africa to a standstill.
According to MK Party leaders, the VAT increase would disproportionately affect low-income communities, placing an unbearable burden on the poor. Thanti Mthanti, the party's National High Command Economic Transformation Sub-Committee chairperson, told Newzroom Afrika that the tax hike would exacerbate inequality and economic hardship for millions of South Africans.
"This targets poor people," Mthanti said, pointing out that the country's minimum wage is around R4,500, much of which is spent on transport and food. "The tax hike will further strain already struggling households."
Mthanti also rejected Godongwana's argument that the VAT increase is essential to fund the SRD grant, calling it a "self-serving argument based on incompetence." He claimed that the SRD grant was already accounted for in the budget, and that the Treasury was using the issue as a political tactic to shift the burden onto vulnerable communities.
"The additional expenditure the Finance Minister is seeking to fund has nothing to do with the SRD grant," Mthanti argued. "The real issue is not a spending crisis but a growth crisis. If the economy had grown at 3%, we wouldn't be facing this situation."
Echoing Manyi's warning, Mthanti declared that if the VAT increase is included in the revised budget, the MK Party would mobilize mass protests to halt the country's operations.
The MK Party has also proposed alternative measures to raise the necessary funds without raising VAT. These include increasing corporate taxes by one percentage point, introducing a wealth tax on the top 1% of earners, and strengthening the South African Revenue Service (SARS) to reduce its R800 billion tax gap.
As the 12 March budget presentation draws closer, tensions continue to rise, with the MK Party's protest threats adding to the already intense debate over the proposed VAT hike and the future direction of South Africa's fiscal policy.
Source - businesstech
