Civil society warns VAT hike will hurt SA’s most vulnerable

Ahead of Finance Minister Enoch Godongwana’s budget speech, civil society groups are voicing serious concerns about what the government’s proposed changes could mean for South Africa’s most vulnerable citizens.

Many fear the impact of a higher VAT and cut in social grant spending will have a devastating impact on South Africa’s poor, who live below the poverty line.

The concerns follow reports that Godongwana has made it clear that if the VAT is to remain unchanged, he may be forced to cut the Social Relief of Distress Grant, which has provided crucial financial support for millions of South Africans struggling to make ends meet.

The spokesperson for rights group, Black Sash, says it would be absurd for government to blame revenue shortfalls on grants.

“There is money in the budget. The SRD Grant is not the reason for revenue shortfalls and it should not be used as a convenient excuse for increasing the cost of living for everyone, especially the poor,” says Oliver Meth.

He stresses that the SRD grant is critical to keeping hunger at bay for South Africa’s poor, who are still feeling the residues of apartheid’s social construct and economic policies.

“The SRD grant is not negotiable. If the Finance Minister is serious about fiscal responsibility, he should start by plugging the hole where public funds are disappearing, not by squeezing more from those who already have the least,” Meth added.

SAVE SA Movement’s Tebogo Mashilompane is similarly concerned, describing any cuts to the SRD grant as “tantamount to torture.”

He’s called for an increase to the SRD grant, instead.

Mashilompane also criticised government’s approach to VAT, saying that increases did not address unemployment.

“When they increased VAT from 14% to 15%, even after that we still experienced high unemployment. So there’s no history that says increasing VAT helps with unemployment,” he said.

He’s urged the Finance Minister to reconsider the proposed 2% VAT hike, as Government of National Unity (GNU) partners remain divided over the potential tax increase.

Economist, Dawie Roodt, believes the government is focusing on the wrong issues.

“The Minister is playing politics here. He’s trying to make it seem as if VAT and the SRD grant are at odds. That’s simply untrue,” Roodt said.

He emphasised that the real issue was government spending.

“It’s not a question of where we’re going to get more money, the bigger issue is how we’re gonna cut state spending. They’re wasting too much money, they’re too inefficient,” Roodt added.

“There are many places where they can cut back on state spending without affecting the grants. One obvious answer is to cut back on the civil servants’ wage bill. They’ve been getting above-inflation wage hikes for a number of years. These civil servants are mostly overpaid and underworked,” he said.

All eyes will be on Minister Godongwane at 2pm today as he tables the contentious budget.