Cosatu has issued a stern warning on Finance Minister Enoch Godongwana against the proposed Value Added Tax (VAT) increase in his 2025 budget speech.
Image: File
Growing calls urge Finance Minister Enoch Godongwana to avoid increasing the Value Added Tax (VAT) in his 2025 Budget Speech, as the Congress of South African Trade Unions (Cosatu) firmly pledges to oppose any tax hikes targeting the working class, particularly VAT and personal income tax for low-income earners.
Godongwana is set to deliver the 2025 budget speech on Wednesday. Concerns are growing regarding Godongwana’s possible decision to raise taxes to address the country’s escalating budget shortfalls.
Cosatu, which represents millions of workers, has made it clear that it would not stand for an increase.
Matthew Parks, the union’s parliamentary coordinator, argued that hikes would push workers, already reeling from the rising cost of living, and a 400-basis-point in the repo rate, further into financial hardships.
“Such increases would plunge workers and their families deeper into debt,” he said.
Parks warned that a VAT increase will stoke inflation, draining money from the economy when it is most needed for recovery.
“It would send a message to society that the government cares more about balancing tables and graphs than workers being able to put food on the table and pay for electricity,” he said.
As South Africans move towards the 2026 local government elections, Parks warned that politicians, particularly the African National Congress (ANC), would be wise to heed this growing discontent.
Calls are mounting Finance Minister Enoch Godongwana with trade unions intending to reject potential VAT hikes in upcoming 2025 Budget Speech.
Image: Independent Newspapers
He argued that the government should focus on security revenue through investing in the South African Revenue Service (SARS) to tackle tax evasion and customs fraud.
Parks suggested an additional R3 billion injection into SARS, which will enable the agency to increase tax compliance from 64% to 67%, potentially generating an additional R60 billion in revenue owing to the state
”It makes no sense to whip those who pay their taxes and ignore those who don’t,” he said.
“Government has a choice: we can continue upon the path that squeezes the poor and starves public services, hoping that will spark an economic recovery or we can be sober and fix the state and ensure it has the resources it needs, stimulate growth, slash unemployment, and in particular give SARS the tools it requires to collect the funds the fiscus desperately needs.”
Parks reiterated that the union will reject any attempt to shift the burden onto workers and the poor.
“Now is the time when the government needs to rise to the occasion and deliver the Marshall Plan that will take our economy to the 3% growth we need,” he added.
“We simply cannot afford another limp budget let alone one that pickpockets workers through VAT or personal income tax hikes.”
Earlier on Tuesday, IOL News reported that several political parties have voiced their opposition to potential increases in Value-Added Tax (VAT).
The South African Communist Party (SACP) and ActionSA expressed criticism, accusing the government of failing to prioritise the needs of the working class while continuing to bow to the interests of the wealthy elite.
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