MKP demands alternatives to VAT increase ahead of budget speech

The South African cabinet’s proposed value-added tax (VAT) increase should be off the table to allow the government to consider other revenue-generating options such as having the wealthy taxed at a higher rate than the poor. 

This was the view of the Umkhonto Wesizwe Party (MKP), which fired a warning shot at the Minister of Finance Enoch Godongwana, who is expected to deliver a highly-anticipated budget speech in Parliament on Wednesday.

Godongwana's budget speech hit a snag last month when the DA and other Government of National Unity (GNU) partners rejected a proposed 2% increase in VAT. 

MKP conveyed its anti-VAT increase message during a march in Pretoria on Monday, where protesters gathered outside the National Treasury's national office.

The political party's chief whip in Parliament, Mzwanele Manyi, said his party will not support any VAT increase, regardless of the proposed percentage.

He suggested that instead of increasing VAT, the government should consider slashing it by two percentage points.

Instead of relying on VAT increases, Manyi said, the government should focus on recouping the R92 billion debt owed to Eskom.

He threatened that if the government implemented a VAT hike, the MKP will mobilise people to take to the streets in mass protests and effectively making the country "ungovernable".

“We are saying there are other avenues they can use. One of them is capacitating SARS so that it can go and get R800 billion. This issue of tax evasion and aggressive tax avoidance by the multinationals must come to an end,” he said.

Manyi also called on the government to reduce the size of “bloated” cabinet members, citing the unnecessary presence of deputy ministers who lack executive authority.

Mpho Marolane, MKP Tshwane regional organiser, said: “We are saying as Umkhonto Wesizwe that the poor cannot afford anything at this juncture and it cannot be that the powers that be just takes the decision in saying that there is increment on VAT.”

He argued that the government is overlooking massive revenue losses due to illicit financial flows, estimated at R400 billion annually.

For instance, he said, the tobacco industry alone is believed to be costing the fiscus around R20 billion.

“Umkhonto Wesizwe says that during apartheid the corporate tax was about 45% and currently it is 27%. The poor cannot bear the burden of carrying the crisis of this country. It must be the rich in actual fact that are able to carry the burdens of this country because they are making billions and millions of money without them really contributing meaningfully to this country,” Marolane said.

MKP parliamentarian Lucky Montana said: “We are very strong on wealth tax. We think that we must go on property tax. We need to look at taxing land that remains unutilised in the country. We believe that VAT shouldn’t even be kept at the level where it is. When it was introduced in the beginning it was around 11%. We think that it will be proper to have VAT at around 13%. Let's give relief to the poor, to South African households.”

Laura Moseme, a senior official at the National Treasury, received a memorandum of demands from MKP leaders and assured them that she will pass it on to her superiors within the department.

rapula.moatshe@inl.co.za