Finance Minister Enoch Godongwana is expected to present an amended budget proposal when Cabinet meets on Monday.
Image: Armand Hough / Independent Newspapers
Cape Town - The Congress of South African Trade Unions (Cosatu) has weighed in on the contentious issue of the proposed value-added tax (VAT) hike, including a suggestion that Treasury start discussions with the Government Employees Pension Fund over a pension contribution holiday as the government scrambles to find a solution to the R60 billion shortfall in the budget.
Finance Minister, Enoch Godongwana, is expected to provide a revised budget to Cabinet on Monday after last month's budget was postponed as GNU partners could not reach consensus on Godongwana's decision to increase VAT by 2%.
The new date for the budget is March 12.
Cosatu spokesperson, Matthew Parks, has since urged the government to tax the wealthy more than the poor.
"We are not supporting any tax increase upon the poor.
"We have been opposing any VAT increase because it's an unnecessary burden upon the poor.
"Workers are already struggling to survive, and there has been a high cost of living increase, especially with regards to electricity and petrol prices,” Parks said.
He emphasised that Cosatu is not opposed to taxation, but rather the unfair distribution of the tax burden.
"We think there are alternatives. We have been engaging the government.
"We think there are easy ways to shift expenditure. We think it is easy to raise money.
"Increase tax among the wealthy.
"Improve tax collection by supporting Sars.
"Cosatu's stance on the matter is in stark contrast to the government's proposal to increase VAT by two percentage points, from 15% to 17%."
The proposed hike of 2% has been met with resistance from opposition parties, including the DA, which has threatened to vote against the budget if the VAT hike is included.
The GNU, led by the ANC, is expected to have a Cabinet meeting today to discuss among others, the contentious increase.
The DA has proposed alternative measures to cut expenditures, which it claims would cause savings equal to the extra R60 billion that the government had estimated would be raised through the VAT increase.
These proposed cuts include a 50% reduction in government advertising budgets, and a 33% reduction in travel and catering expenditure for government officials.
"We believe that there are alternative measures that can be taken to address the budget shortfall, without placing an undue burden on the poor,” the DA wrote in a statement.
Political analyst, Dr Thabo Mokoka, said the Cosatu and the DA were right in asking the ANC to reconsider its position.
“It remains to be seen whether the government will heed Cosatu's call to tax the wealthy more than the poor…The problem with all this is that Sars has not been transparent to the people of the country, which has made it difficult for the people," Mokoka said.
Economic analyst, Siyabonga Sibiya, said the 0.75 increase was impossible, however, it would be a decision of the ANC and the DA.
“It's only the GNU that can decide.
"The Cabinet meeting today (Monday) will leave us with more answers than questions.
"The main question that South Africans are asking themselves is where is all this money going?” Sibiya said.
Cape Argus
