South Africa’s budget crisis highlights ideological tensions in the Government of National Unity. The ANC seeks to raise taxes on the poor to fund social services, while the DA aims for severe public spending cuts. Unions oppose both approaches, advocating for alternatives that tax the wealthy instead. Protests have emerged, showing widespread dissatisfaction with government policy as economic hardships mount for the working class.
On March 1, 2025, it was revealed that South Africa’s Government of National Unity, comprising the ANC and the DA, is at odds over solutions to the budget crisis. The ANC proposes increasing the Value Added Tax (VAT) from 15% to 17% to maintain social program funding, while the DA pushes for significant cuts to public spending. This discord marks a troubling moment for a post-Apartheid government, as they grapple with the realities of a working class facing deeper economic instability.
The ANC’s VAT hike aims to generate revenue amid rising living costs, as citizens are already struggling financially. NUMSA’s General Secretary, Irvin Jim, highlighted that the poor are overwhelmingly burdened, spending nearly 60% of their salaries on essentials, and this proposal would deepen their financial strains. Additionally, the impending 12.7% increase in tariffs for basic services compounds these pressures.
Opposition from key unions like COSATU and the SACP, as former allies of the ANC, has surfaced against the VAT hike. COSATU emphasized that the government prioritizes financial balance over the well-being of workers, warning the ANC about potential electoral repercussions approaching the 2026 local elections. Similar sentiments were echoed by the SACP, which criticized the lack of consultation from the ANC.
Despite criticisms from left-leaning allies, the ANC has aligned itself with the DA to secure legislative support for the VAT increase. This relationship complicates things, as the ANC long criticized the DA’s neoliberal agenda, yet now must collaborate due to its diminished electoral strength following the 2024 elections.
Protests erupted in Cape Town against the budget cuts and VAT increase, highlighting citizen discontent. Critics dispute the Treasury’s revenue forecasts, recalling that prior increases fell short, as higher VAT tends to dampen overall consumer spending due to rising prices.
Alternative revenue-raising proposals from unions advocate for taxing the wealthy and tightening regulations to combat tax evasion. The SAFTU highlighted significant potential revenue through a wealth tax, which they argue would be more equitable compared to raising the VAT.
COSATU joined protests advocating for enhanced revenue collection through better taxation compliance rather than increasing burdens on those who already contribute. With rampant unemployment and widespread hunger, public sentiment strongly opposes austerity measures that prioritize budget cuts over essential services.
The budget crisis facing South Africa’s Government of National Unity underscores significant ideological divides within the ruling coalition. The ANC’s commitment to increasing VAT contrasts sharply with the DA’s push for austerity, and both positions have drawn ire from labor unions and activists alike. As public dissatisfaction grows and economic conditions worsen, the struggle for equitable solutions continues, with calls for taxing the wealthy gaining traction. This crisis reflects deeper fractures in the political landscape, compelling unions and grassroots organizations to advocate for systemic reforms that prioritize the working class.
Original Source: indepthnews.net
