Fuel levy and VAT hikes a war on SA’s poor

Terry Bell. Picture: SuppliedPHOTO:
Terry Bell. Picture: SuppliedPHOTO:

Even elements of the governing ANC have joined a labour movement united with human rights organisations that are up in arms about what they rightly decry as an attack on the poor in the latest budget.

It is a case, once again, of workers – whether employed or unemployed – having to bear the burden of maladministration, profiteering and corruption that is not of their making.

But to focus on the 1% increase in value-added tax (VAT) is a mistake.

The increased fuel levy of 52c per litre will probably cause even greater suffering to the poor majority, since it will put up the cost of transport.

Another error is to focus on food items that are zero rated and therefore free of VAT.

Former finance minister Malusi Gigaba lauded the existing 19 “basic items” that are zero rated.

This, he implied, would absolve the poor from the additional costs caused by the VAT increase.

It was a good illustration of the sort of patronising attitude often found among the rich and powerful towards people mired in poverty – an attitude prevalent in the apartheid era.

It is one that maintains that the poor choose a fundamentally inadequate diet centred on mealie meal, samp, brown bread and tinned pilchards.

Extending this list to other food items will also be of little help because both poor people and the rich require not only decent diets, but also clothes, school uniforms, shoes, transport, personal hygiene products and basic medicines.

This is something Gigaba and most of the business lobby who support this assault on the economically vulnerable do not stress.

Nor is there much mention from these quarters that VAT-inclusive services such as electricity and water also have to be paid for at the same rate for the rich and the poor.

At the same time, government continues to make much of its claimed commitment to prioritise education.

This now sees the administration scrabbling about trying to find R57 billion to fund a proportion of tertiary education, while hoping that R57 billion will be enough.

But to concentrate on the tertiary sector in a country with a high level of functional illiteracy is ridiculous, especially when lip service is constantly paid to “creating a nation of readers”.

Government also continues to lay stress on building more libraries, while at the same time continuing to charge VAT on books.

Although the digital revolution is upon us, printed material – especially books – will remain vital for many years even if they eventually become a rarity.

Books are crucial because they are the engines of knowledge acquisition and transfer.

This is why demands are again being made to zero rate books.

It has been pointed out that, of 82 countries surveyed by the International Publishers’ Association, only eight levy a higher VAT rate on books than South Africa.

Most countries in Africa, and all but Chile in Latin America, charge no VAT on printed books.

Countries such as the UK zero rate not only books, but school uniforms.

Trade unions internationally agree that VAT is a regressive tax that punishes those who can least afford to pay.

There is also widespread agreement that existing tax regimes favour the wealthy.

But this is nothing new.

Governments are trapped within the free market system and captured to varying degrees by the dominant banks, corporations and international money lenders.

They then punish the sellers of labour for the greed and destructiveness of those who hold them hostage.

Yet there are other choices that labour and civil society are keen to promote. Perhaps it is time for government here to listen.

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