The Congress of South African Trade Unions (COSATU) and the Federation of Unions of South Africa (FEDUSA) said on Thursday that they welcome the government’s decision to postpone Finance Minister Enoch Godongwana 2025 Budget speech to March.
Fedusa said that this unprecedented move reflects the complexities inherent in a coalition government, while highlighting the importance of thorough deliberation on fiscal policies that impact all South Africans.
FEDUSA stated: ‘The postponement arises from ongoing discussions within the Government of National Unity (GNU) regarding proposed tax adjustments, notably the suggested 2 per cent increase in Value-Added Tax (VAT) from 15 per cent to 17 per cent.’
Fedusa added that they have consistently expressed concern over tax hikes that disproportionately affect workers and low-income households, especially amidst the prevailing economic challenges, including a crippling cost of living crisis.
FEDUSA continued: ‘We commend the government’s commitment to transparency and inclusive dialogue, as evidenced by the decision to delay the budget presentation to achieve consensus among coalition partners.
‘FEDUSA remains hopeful that this period will allow for the development of equitable fiscal strategies that prioritise economic growth, job creation, and the welfare of all citizens.’
‘The union said it stands ready to engage constructively with all stakeholders during this critical time to ensure that the forthcoming budget reflects the needs and aspirations of the South African workforce.
‘COSATU said that it welcomes the postponement of the tabling of the 2025-26 Budget.
‘Whilst this is not the most elegant way to process budgets, the Federation is pleased that it and others’ interventions to stop a regressive 2 per cent VAT hike bore fruit.
‘It is a sign of political maturity that the government responded positively to these calls and stepped back from the precipice.
‘It is better that government experiences some badly needed humbling and goes back to the drawing board than to have rushed a Budget
‘This Budget not only would have been rejected in Parliament, potentially creating a constitutional crisis and unnecessary political theatrics we could do without, but most importantly would have been an unbearable burden upon working-class families who are already heavily in debt, battling to cope with the rising costs of living and whose meagre wages have frequently not kept pace with inflation.
‘These include providing the South African Revenue Service with an immediate additional R3 billion to boost tax compliance from 64 per cent to 67 per cent, thus generating the R60 billion needed.
‘Engagements must also take place with public and private financial institutions to shoulder a greater portion of the financing required to boost infrastructure, SMMEs, industrialisation, exports and job creation than the fiscus can afford.’
COSATU added that it will continue to engage the government, and in particular the Presidency and Treasury, to ensure that the many progressive allocations in the proposed Budget are retained and defended whilst simultaneously providing more sober revenue proposals that will ensure the state is able to collect the taxes already due to it.
COSATU said that they are confident that if such engagements are approached from a perspective of finding solutions, then a Budget that capacitates the state, unlocks economic growth, creates jobs and protects the vulnerable can be tabled at Parliament on 12 March.
The South African Federation of Trade Unions (SAFTU) released a statement on Thursday in which they stated that they are against the budget and particularly opposed to VAT increases
SAFTU stated: ‘We unequivocally rejects the National Treasury’s proposal to increase the Value-Added Tax (VAT) by two percentage points, raising it to 17 per cent.
‘This proposal, which has triggered an intra-Cabinet dispute and led to the unprecedented postponement of the national budget, is a direct assault on the working class and the poor. It will deepen existing inequalities and worsen economic hardships.
‘SAFTU, alongside many other organisations that rallied on February 18 and marched against Finance Minister Enoch Godongwana on 19th February, demands the immediate scrapping of the VAT hike.
‘Instead, we call for increased taxation on the wealthy and corporations and stricter exchange controls to curb capital flight and tax evasion by the unpatriotic bourgeoisie.
‘This reasoning is flawed. Corporate tax rates have been drastically reduced since the end of apartheid to appease private capital. Yet, private investment has stagnated, economic growth has been sluggish, and unemployment remains at crisis levels.
‘The Treasury is making its class allegiance clear by opting for a VAT increase over corporate tax hikes.
‘While the Treasury proposes expanding the basket of zero-rated VAT goods, such as tinned vegetables and certain meat products, this will not sufficiently mitigate the burden on the working class.
‘VAT is factored into the entire production chain, and businesses routinely pass on increased costs to consumers.
‘As a result, the working class will disproportionately bear the brunt of this increase.
‘A VAT increase could trigger inflationary pressures, further eroding household incomes. Since the end of the Covid-19 lockdowns, the South African Reserve Bank (SARB) has aggressively raised interest rates, transferring wealth from workers to bankers under the guise of inflation control.
‘If VAT increases fuel further inflation, SARB may respond with additional interest rate hikes, compounding financial distress for workers and small businesses.
‘SAFTU strongly rejects this regressive tax increase, as it disproportionately impacts low-income households who spend a greater share of their income on consumables.
‘’The Treasury argues that the two per cent VAT increase will generate R58 billion (£2.5 billion in additional revenue for 2025-26.
‘However, this claim is both misguided and unnecessary. SARS Commissioner Edward Kieswetter has stated that South Africa could collect over R460 billion (£19.9 billion) in additional revenue if tax administration were more efficient.
‘Factoring in R300 billion (£12.96 billion) in outstanding tax returns, potential revenue could reach R700 billion (£30.2 billion) – far exceeding what the VAT increase aims to collect.
‘Moreover, the one per cent VAT increase in 2018 failed to generate the expected revenue, raising doubts about the Treasury’s projections. South Africa has reached a point where additional tax hikes harm the economy without yielding substantial revenue.’
‘The proposed VAT increase is a short-sighted, regressive policy that burdens society’s most vulnerable members. SAFTU demands that the government explore progressive taxation and anti-corruption measures instead of shifting the fiscal burden onto the working class.
‘Yesterday’s march in Cape Town on 19th February, 2025, was an excellent and auspicious start to creating a broad front of unity for the working class, including union federations, the X of the Excluded coalition, religious formations, farm workers, and progressive organisations like Equal Education and the Treatment Action Campaign.
However, we still lacked critical mass due to our failure to secure Section 77 worker protection.’
The South African Communist Party SACP has also said that it is opposed to the Budget.
In a statement on Friday the SACP said: ‘We join together with COSATU FEDUSA and SAFTU in opposing this anti-worker Budget.
‘These attacks on the working class will not be accepted.
‘Raising VAT hits the poorest hardest and will not improve the economy.’
- The National Union of Metalworkers of South Africa (NUMSA) picketed the offices of the Industrial Development Corporation (IDC) in Sandton, Johannesburg, on Friday to demand urgent action on the looming sackings at ArcelorMittal South Africa (AMSA).
Phakamile Hlubi-Majola, NUMSA spokesperson, said that they are currently engaged in talks with the management of AMSA as part of section 189 consultation.
Hlubi-Majola said: ‘This follows the announcement by the company that it intends to put the Long Steel business into care and maintenance.
‘Such a decision, if it were to be finalised, will result in the retrenchment of approximately 3,500 employees. According to analysts, the impact of job losses would be devastating, with as much as 100,000 jobs being lost along the value chain.’
Hlubi-Majola said that at the same time, workers from SA Steel Mills will also join the march as the company has said that it will sack hundreds of workers because it is in debt and claims that it can no longer produce steel for a profit.