SACP bashes Gigaba's 'regressive' VAT hike

26 February 2018 - 15:50
By Neo Goba
Finance Minister Malusi Gigaba during his medium-term Budget speech in parliament in Cape Town.
Image: Esa Alexander/The Times Finance Minister Malusi Gigaba during his medium-term Budget speech in parliament in Cape Town.

The South African Communist Party has rejected Finance Minister Malusi Gigaba's announcement of an increase in Value Added Tax (VAT) and income tax‚ warning that it marks the possible beginnings of a "regressive creep".

"While some basic foodstuff are zero [VAT] rated‚ the working class and the poor do not live on bread and pap alone. It is simply untrue to argue‚ as the minister of finance did‚ that the 20 percent poorest will be unaffected by the VAT hike‚" said SACP general secretary Blade Nzimande.

He was addressing members of the media on Monday following the party's 14th Congress Central Committee third plenary session in Kempton Park‚ east of Johannesburg.

Last week Gigaba said the increase was to ensure to raise head with the R48.2-billion budget shortfall and to increase revenue.

Other tax increases include a 52 cents per litre rise in the fuel levy - made up of 22 cents per litre for the general fuel levy and 30 cents per litre for the Road Accident Fund levy - and rises of between 6 and 10 percent in the alcohol and tobacco excise duties.

"What is more‚ other indirect taxes‚ like the increase in the fuel levy‚ will further impact on the cost of living especially for the poor. Overall‚ the macro-economic impact of the VAT increase will dampen demand‚ impact on GDP growth and have negative implications for the employment creation‚" said Nzimande.

He said that the SACP would be campaigning to ensure that by the time of the next budget the VAT increase will be rolled back‚ and that other measures must be found to address the deficit‚ including "active recovery of billions of stolen capital".

Solly Mapaila‚ SACP's first deputy general secretary‚ also revealed that the alliance was not informed about the VAT hike.

"We were not consulted on the VAT [increase] and we are unhappy about that and the Central Committee was clear about that. But we must also indicate that the VAT already becomes the law. So if you are constitutionalists‚ you don’t necessarily have to accept the VAT‚ but you have to accept the law so. That is why we will campaign so that in the next term‚ this decision is reversed‚" said added Mapaila.

Meanwhile‚ the Democratic Alliance launched a national petition on Sunday to have the VAT increase revoked.

Leader Mmusi Maimane claimed the budget showed that there was "no real change" from the ANC in government.