Concerned about the negative effects on workers already struggling with a high cost of living, the Congress of South African Trade Unions (COSATU) has voiced strong opposition to the African National Congress’s (ANC) proposal to raise Value-Added Tax (VAT) by two percentage points. Following the historic postponement of Finance Minister Enoch Godongwana’s Budget Policy Statement, which has been rescheduled for March 12, 2025, this development has occurred.
COSATU’s Position on the Increase in VAT.
Zanele Sabela, the national spokeswoman for COSATU, stressed that workers’ financial hardship would worsen if VAT increased. She emphasized that a large number of workers are already dealing with heavy debt and stagnant salaries that have not increased in line with inflation. “Workers are carrying a very heavy burden,” Sabela said. They have too much debt. It would have been extremely difficult for employees to pay an additional two percentage points of VAT.
“We think it is a good thing that government decided to listen to all the warnings and actually take a break, so that they can go back and reconsider,” she added, praising the administration’s move to reevaluate the proposed raise.
Postponement of the Budget Speech
This is the first time in South Africa’s democratic history that the budget address has been postponed. Disagreements within the coalition government, specifically between the ANC and its primary ally, the Democratic Alliance (DA), regarding the intended VAT rise, were the cause of the delay.
The rescheduling was announced by Speaker of the House of Representatives Thoko Didiza, who acknowledged the need for more discussion to reach an agreement on budgetary measures that affect all South Africans.
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