Finance Minister Enoch Godongwana was set to deliver the Budget Speech last month, but it was postponed due to discord over the proposed VAT increase.
Image: File
AS THE Government of National Unity (GNU) is rattled by another head-butting episode over the contentious issue of the proposed 2% Value-Added Tax (VAT) increase, the Government of Provincial Unity partners in KwaZulu-Natal are also opposed to the hike.
The GPU in KZN consists of former enemies-turned-allies, the IFP, the ANC, the DA and the NFP.
The clash over the proposed 2% VAT increase by the Minister of Finance Enoch Godongwana forced him to postpone his budget speech from February 19 to March 12.
VAT currently stands at 15%.
Political parties who formed the GPU in KZN agree this would have serious implications for the downtrodden.
Lourens de Klerk, finance spokesperson for the IFP, the party leading the GPU, said: “It is clearly not in the interest of all the citizens of South Africa that VAT is increased. It will have a negative impact on our economy and will punish the poor, thus it is a terrible idea and should be opposed by people of goodwill.”
The DA’s provincial leader and Finance MEC, Francois Rodgers, agreed.
“From a fiscus protective perspective and current situation regarding poverty and unemployment, any increase in VAT would ultimately affect the poorest of the poor and will put further pressure on the inflation rate,” said Rodgers.
Godongwana reportedly said his VAT increase proposal was to cover the staggering R60 billion budget shortfall.
However, Rodgers said the Treasury should explore other tax avenues, such as imposing online gambling tax for companies instead of upping the VAT.
“Online gambling has become a huge industry in the country and all the provinces. It is now a form of gambling that is not taxed in any form. We know that horseracing is taxed, Casinos are taxed, but online gambling is not taxed. That in itself is another huge source of revenue. But for any increase in VAT, we don’t support it,” concluded Rodgers.
Simphiwe Khumalo, the deputy chairperson of the NFP, a kingmaker party in the province, lambasted the national Treasury for its attempts to increase VAT.
“We will not allow this as the NFP. We represent poor people, and any increase in VAT will burden them further. People are struggling to make ends meet due to the high cost of living in our country. An increase will be devastating to the millions of poor South Africans,” said Khumalo.
He said they voiced their concerns to its partners in the GPU about the looming crisis should the Treasury be given a leeway to increase VAT.
“We have told the parties that we are not happy with any VAT increase proposal. This is because we also believe that if the national government is allowed to increase VAT, this would lead to the collapse of many small businesses, which are the backbone of our economy,” said Khumalo.
Fanle Sibisi, the spokesperson of the reconfigured provincial ANC structure led by party veteran Jeff Radebe, said the party will convene a media briefing session on Wednesday to address various issues including the proposed VAT hike.
Meanwhile, there have been reports that the ANC was courting Julius Malema’s EFF to back the budget speech when it gets tabled on March 12 at the National Assembly.
But Malema publicly denied any claims of any behind-the-scenes discussion with his ANC counterparts.
In calling for heads to roll, the Jacob Zuma-led uMkhonto weSizwe Party (MK Party) has asked Auditor General Tsakani Maluleke to probe what it termed “fruitless and wasteful expenditure” incurred during the preparations for the postponed last month’s Budget Speech.
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