South Africa faces rising tensions surrounding the government's proposal to increase the Value Added Tax (VAT) by two percent, leading to significant public backlash and the postponement of the national budget speech. The proposed hike, which could raise the VAT from 15% to 17%, is seen as exacerbated by already intense economic pressures on South Africans, particularly those from vulnerable communities.
The postponement of the budget speech on February 20, 2025, was largely due to disagreements within the Government of National Unity (GNU). Finance Minister Enoch Godongwana was expected to announce the VAT increase, but differing opinions among coalition partners prompted the delay. Matshidiso Lencoasa, Chairperson of the coalition, expressed her grave concerns: "When we saw the VAT increase by 2%, my heart just fell, because I just anticipated social upheaval...the economy and economic situations.” According to Lencoasa, South Africans are already struggling under the weight of poverty and unemployment, and any additional burden would be dangerously ill-timed.
The uMkhonto weSizwe Women’s League (MKWL) echoed these sentiments, asserting the proposed tax increase as a direct attack on women and the impoverished. Lindiwe Mtshali, the MKWL national coordinator, emphasized the disproportionate impact of increasing VAT on households headed by women: “42.3% of South African households are led by women who are single mothers, pensioners, and the unemployed.” She described the economic situation facing women as one where they suffer from "double jeopardy" due to the intersection of gender and race, exacerbated by austerity measures over the years. Mtshali condemned the VAT increase as "economic violence" against the people, especially targeting the most vulnerable.
The public response following the VAT announcement has been swift and overwhelmingly negative, with many questioning the feasibility of handling such increases amid soaring living costs. A social media poll highlighted these concerns, prompting many South Africans to share their views on the potential impact of the proposals. Notably, many fear the hike will worsen food insecurity and intensify struggles for basic goods.
John Steenhuisen, leader of the Democratic Alliance (DA), viewed the delay as "responsible," framing it as necessary to protect citizens from the burden of increased taxes. "We are absolutely opposed to the VAT increase, and we will not support a budget...that would have a 2% VAT rise,” he stated. Steenhuisen also emphasized the need for the government to focus on economic growth rather than merely tightening fiscal policies.
President Cyril Ramaphosa sought to calm fears over the budget postponement by stressing the need to find initiatives focused on growth. He stated, "We are called upon as the national leadership to pursue all initiatives aimed at growth...to increase employment and alleviate poverty." His remarks alluded to the challenges faced by the GNU, highlighting the need for balanced budget discussions amid constrained fiscal environments.
The discussions around the VAT increase shed light on the historical backdrop of VAT policies in South Africa. The VAT system was introduced on September 30, 1991, at a rate of 10%, which has since seen multiple adjustments, including the most recent hike to 15% enacted in 2018. Should the proposed increase proceed, South Africa would witness its highest VAT rate at 17%, exacerbated by the country's dire economic situation.
Community leaders, led by organizations like MKWL, urged citizens, especially women, to mobilize against this potential VAT increase. They are calling for collective action to protest against what they perceive as betrayal from those who govern and policy decisions prioritizing fiscal adjustments over the everyday struggles of the populace. “South African women must rise against this betrayal! The time for silence is over. Women are not passive observers of economic injustice,” said Mtshali, encouraging activism against the VAT hike.
The situation continues to evolve as South Africans await the rescheduled budget speech on March 12, 2025. The debates surrounding the VAT increase remain central to discussions on economic growth and social equity. Citizens are concerned about how these financial decisions will shape their future, raising alarms over the preservation of livelihoods and social welfare across the nation.