THE South African Federation of Trade Unions (SAFTU) on Wednesday rejected the budget of the ANC led coalition for a second time.
SAFTU stated: ‘SAFTU unequivocally rejects the recent budget speech delivered by Finance Minister Enoch Godongwana.
‘This budget is completely divorced from the ongoing suffering and impoverishment of the majority of people living in this country. It says nothing about the deepening social crisis and completely ignores the persistently high levels of inequality.
‘Instead, in the face of ongoing hunger, this government and Treasury ask, “Why don’t they eat cake?”
‘The International Monetary Fund has been increasingly vociferous that Godongwana cut our state budget.
‘Since October 2020, South African state spending on services, per person, has shrunk by 18.1 per cent. The IMF insists on another 3 per cent GDP budget cut from 2025-27. This represents an outrageous loss of sovereignty.
‘In a year in which the ruling party lost so many votes – from 57 per cent in 2019 to 40 per cent in 2024 – and therefore required alliances with several pro-capitalist parties, big business and the state amplified their investment strike, with a 3.6 per cent decline in fixed capital formation.
‘The government’s decision to increase the Value-Added Tax (VAT) by 0.5 percentage points is a direct attack on the poor, who are already struggling under economic hardship. VAT is a regressive tax system that impacts the poor more than the rich.
‘This increase will disproportionately harm the working class and the poor while leaving the wealthy and big corporations untouched.
‘Evidence shows that past VAT increases failed to generate the expected tax revenue, while lowering consumer spending and worsening economic stagnation.
‘SAFTU, along with other progressive forces, has long demanded that Treasury tax the wealthy and big business instead of making the poor pay for the fiscal crisis. However, the government has completely ignored every alternative proposal to raising VAT. These alternatives include:
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- Corporate Tax Reform: Reverse the 2022 corporate tax cut and increase rates to 32 per cent, generating 60 billion rands (£2.5 billion).
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- Wealth Tax on the Richest 1 per cent: A progressive wealth tax on individuals with a net worth over 50 million rands can raise 35 billion rands.
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- Financial Transactions Tax: A 0.1 per cent tax on financial trades (stocks, derivatives, forex) can generate 80 billion rands (£3.4 billion.
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- Crackdown to stop corporate tax dodging will recover 60 billion rands.
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- Luxury Goods Tax: Higher taxes on luxury cars, private jets, and imported designer goods will raise R15 billion.
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- Ending Corrupt Procurement & Tender Fraud: Cleaning up public sector contracts can save R40 billion.
‘These progressive taxation measures would generate 365 billion rands (£15.4 billion) annually – eight times more than a VAT increase.
‘The working class cannot afford to remain passive while the government sacrifices our future for the sake of the rich. The fightback continues!
‘Forward to mass mobilisation! Forward to a People’s Budget!’
Meanwhile, the Congress of South African Trade Unions (COSATU) also rejected the budget for a second time.
Its statement said: ‘COSATU notes with extreme disappointment the 2025-26 Budget tabled at Parliament by government.
‘Whilst there are many progressive provisions that COSATU campaigned for in the Budget, its primary source for funding these with an unnecessary 0.5 per cent VAT hike for each of the next two years and not adjusting personal income tax brackets for 2025 will be a painful blow to millions of highly indebted working-class families and an already battered economy.
‘COSATU cannot support tax hikes upon the working class and the poor and thus calls upon Parliament to reject this ill-considered pickpocketing of workers and amend the Budget with more progressive tax revenue options.
‘VAT is regressive and hurts the poor who already cannot afford to buy essential foods, electricity or transport.
‘The decision not to adjust tax brackets for low- and middle-income workers is not acceptable when they are already drowning in debt with their meagre wages not keeping pace with inflation.
‘These tax hikes will now make the lives of millions even more difficult.
‘The freeze of fuel price taxes for a second year will bring welcome relief to commuters and the economy.
‘The commitment to hiring more teachers, doctors, nurses, home affairs, police and border management officers, amongst other critical frontline personnel will boost public services; but details on when this will be done, and the exact numbers must be provided.
‘The finalisation of the public service wage agreement will help public servants heal financial wounds.
‘We are concerned about the impact the loss of valuable skills and experience by public servants who may opt for early retirement, may have upon the state’s ability to provide public services.
‘The rising number of municipalities battling to pay staff, including pension funds, or provide basic services as well as the doubling of municipal debt owed to Eskom to 94 billion rands (£4 billion), and community debt owed to municipalities nearing 300 billion rands (£12.7 billion), requires accelerating interventions to stabilise and rebuild local government.
‘It is critical that a new municipal funding model be developed, and the move towards the District Development Model be expedited.
‘COSATU applauds the outstanding work done by Eskom and municipal workers to overcome cuts.
‘We are pleased that the debt relief package has provided Eskom breathing space to ramp up maintenance.
‘It is critical that Eskom be given more support to tackle corruption, wasteful expenditure, cable theft and bring on board new generation capacity.
‘The allocation of 219 billion rands (£9.24 billion) for energy infrastructure will be an invaluable boost. These measures must translate into affordable electricity if the economy, in particular mining and industry, are to survive and grow.
‘The state run transport service, Transnet, should be assisted to settle its debt to free up capital for the modernisation of its port and railway network, as these will unlock the mining, manufacturing and agricultural sectors and create thousands of badly needed jobs and boost state revenue.
‘The R19.2 billion (£810 million) infrastructure support for Metro Rail will boost its efforts to return to full capacity and enable 10 million workers and commuters to travel quickly and save money on transport.
‘Treasury must urgently honour its court signed business rescue agreement to provide the Post Office with the long delayed 1.4 billion rands (£59 million). Failure to do so will see the collapse of this institution.
‘COSATU welcomes the substantial above inflation increases for social grants, helping 19 million recipients cope with the rising costs of living.
‘We are deeply dismayed that government failed to provide similar inflationary protection for the 8 million other grant recipients, who once again will be denied any increase. This is an absolute abomination.
‘Whilst there are many progressive provisions in the Budget, including allocating 61 per cent for social wage expenditure, which COSATU campaigned for, we are deeply dismayed by the VAT hike and the failure to adjust income tax brackets that will inflict unnecessary pain upon working class families and the economy.’
