The official opposition party in Parliament, uMkhontho WeSizwe as well as the Economic Freedom Fighters (EFF) have proposed that a wealth tax be introduced instead of imposing more taxes on low-income homes.
Godongwana proposed 1 percentage point increase in VAT with 0.5 percentage points implemented this year and a further 0.5 next year.
“The shameful budget, finally tabled after an embarrassing inability to do so last month due to internal GNU squabbles, is the final nail in the coffin of the economic struggles facing the [impoverished] and working class while there are all sorts of promises for the parasitic white capitalist establishment,” said the EFF.
Detrimental to the impoverished and the middle-class
“The EFF wants to assure South Africans that a delayed and prolonged increase in VAT over a two-year period remains detrimental to the [impoverished] and the middle-class and remains an unviable option to generate revenue.”
ActionSA unequivocally rejected the VAT increase as they believe “hardworking South Africans” will be hit the hardest by this move.
“While VAT may be the most efficient of the major taxes, it disproportionately harms the [impoverished]. At the same time, the refusal to adjust tax brackets for inflation amounts to a stealth tax. It pushes ordinary workers into higher tax brackets without an actual salary increase.”
ANC alliance partners Cosatu says the VAT hike will be a painful blow to millions of highly indebted working class families.
“Cosatu notes with extreme disappointment the 2025/26 Budget tabled at Parliament by government,” it said.
Look at other alternative means
Mmusi Maimane’s Build One SA (Bosa) has proposed that National Treasury look at other mechanisms to increase revenue, including reducing bailouts for state-owned entities, streamlining administrative and executive costs in provincial government and reducing the number of cabinet ministers.
”This [the VAT increase]means working, taxpaying South Africans will pay more income tax and receive less tax rebate benefits. By next year, VAT will be 16%, and we are now at the peak pressure point of taxing citizens.
“Instead of making budget cuts to unnecessary spending, the GNU decided to squeeze the dwindling tax base for an extra R28-billion in tax revenue this year.”
Meanwhile, the Democratic Alliance (DA) is digging in its heels regarding its rejection of the VAT increase.
DA digging in its heels
Following the speech, DA leader John Steenhuisen reiterated his party’s stance. He mentioned that his party is vehemently against a VAT increase. The party will not be supporting the passing of the budget in Parliament, he said.
“We do not think that a VAT increase is the right way to proceed. If we do not get growth, we will be sitting back by the end of October and February next year. We will be trying to get money to do what we are supposed to do. There are several huge bold moves which could have been announced today. Ones which could send the right message. Instead we are back at borrow, cut, tax and spend.
“It is odd that a budget can be tabled without the confidence that you have a majority. The ANC has a 39% to 40%in Parliament and they need other parties to pass the budget,” he said.
The DA and ANC have been at loggerheads over the proposed two percentage VAT increase. It was initially going to be tabled in Parliament last month. The budget then had to be postponed, allowing further consultation on the matter.
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