PLANS TO INCREASE VAT FACING STIFF OPPOSITION

Calls for alternative revenue solutions

- MAYIBONGWE MAQHINA

PARTIES, trade unions, and lobby groups have voiced strong objections to the proposed VAT increase in the revised 2025/26 budget, arguing that it will disproportionately impact lower- and middle-income households already grappling with financial difficulties.

The concerns were raised during a joint meeting of the parliamentary finance committees yesterday ahead of the adoption of the budget next week. Cosatu's parliamentary counselor, Matthew Parks, said the labour federation was quite happy with allocations made to the South African Revenue Service (SARS) to help tackle tax evasion.

"We are, however, opposed to the VAT hike, and we appreciate it's less than the 2%, but we still feel a VAT hike hits the working class, who are just simply drowning in debt, are struggling to survive, and so forth. We are also concerned about not having tax brackets for lower- and middle-income workers, who, again, are struggling to cope with the rising cost of living," Parks said.

In the Cosatu submission, Parks said there was space on the revenue front to reduce the burden on the fiscal by shifting some of the economic infrastructure projects to the development finance institutions (DFIs) and also engaging the South African Reserve Bank (SARB) about increasing the Gold and Foreign Exchange Contingency Reserve Account allocation this year by R10 billion.

DA MP Mat Cuthbert said his party was strongly opposed to any VAT increases.