A VAT increase would negatively impact workers living cost: Cosatu

COSATU says it had warned government that the ANC’s proposed two percentage points increase in Value-Added Tax would negatively affect workers.

The government of national unity’s disagreement on the issue led to the postponement of Finance Minister Enoch Godongwana’s Budget Policy Statement to the 12th of next month. It is the first such postponement in democratic South Africa.

[WATCH] In an unprecedented move, the government postponed the tabling of the national budget yesterday. This follows disagreements over proposed tax increases within Cabinet. The national budget will now be tabled on the 12th of March. pic.twitter.com/CtlOgg70CK

— SABC News (@SABCNews) February 20, 2025

COSATU national spokesperson Zanele Sabela says an increase in VAT would be detrimental to workers in the midst of a high cost of living.

“Workers are carrying a very heavy burden. They are overly indebted. Workers are actually battling to cope with the high cost of living and their salaries, you know their wages have just not been keeping up with inflation. So, an extra two percentage points of VAT would have been really, really hard on workers. That’s why we are relieved that it was stopped and it didn’t go through. We think it is a good thing that government decided to listen to all the warnings and actually take a break, so that they can go back and reconsider.

Budget 2025 | Reaction to postponement by political parties: