Budget 2022

Inside Labour: VAT a time bomb continuing to tick


WORKERS, employed and unemployed, bear the major burden of the government’s tax regime, and should have a greater say in how the system functions. That is the gist of protests made to Parliament this week in the wake of what is justly seen as an anti-poor 2018 Budget.

A petition, signed by thousands of individuals and supported by labour, human rights and anti-poverty organisations, rejected the value-added tax (VAT) increase announced in the budget and called for more time for public submissions on the financial proposals.

The petition noted that there are “other ways of raising revenue”.

Alternatives proposed included the now standard call by labour to raise the taxes imposed on corporates and high income earners. Also targeted were suggested increases in the so-called sin taxes on alcohol and tobacco products.

The hope is that the new administration will - in line with the spirit implied in President Cyril Ramaphosa’s promise of jobs and investment “summits” - listen to and act on the range of alternatives proposed. These, it is argued, might better meet the government’s constitutional prerogative to achieve “equality and the advancement of human rights and freedoms”.

Regressive measures such as VAT clearly do not meet this requirement and even an apparent majority within the ANC are now opposing the announced 1% increase. However, although it appears that in line with most of the population, most parliamentarians - including most ANC MPs - oppose the VAT increase, it will be implemented.

So much for democracy and the will of the people. But, as the entire labour movement has pointed out, it is not the increase, but VAT itself that is the problem.

VAT is seen as the clearest example of how skewed the tax regime is in favour of the rich; a regime that makes working people bear the brunt of the burden for maladministration, profiteering and corruption that is not of their making. Another example is the increase of 52 cents a litre in the fuel levy.

By putting up the price of fuel, transport costs overall will rise, so pushing up the prices of goods and many services. Once again, the additional cost will be met equally by those mired in poverty and those whose income extends to tens of millions of rand annually.

As is often mentioned, South Africa is a country with perhaps the greatest wage and welfare gap in the world. In a small way, this was highlighted during budget week with the news that there are already guaranteed orders in South Africa for several of the latest Ferrari cars - at R4.5m each.

It is news such as this, in a country where more than half the population survives on often much less than R50 000 a year, that raises the political temperature.

Obscene situation of CEO pay

It also comes on top of an awareness of the quite obscene situation where some chief executives are paid more than 4 000 times the minimum wage of R3 500 a month scheduled for introduction this month.

It is not a question of the politics of envy, that working people decry the fact that, for example, the 16 chief executives of five commercial banks and ten major corporations between them last year pocketed more than R1bn. And that does not include share options, other perks and remuneration from directorships in other companies.

It is facts such as these that cause growing anger among working people, including those usually, and wrongly, classified as “middle class”. Income levels, in and of themselves, do not define, objectively, the class position of individuals and their families.

Those who sell their labour in order to survive - employees paid only a proportion of what their work is worth - are by definition workers.

However, most media refer to middle class families as those earning an after tax income of around R10 000 a month and more. Yet these are people, as several studies have shown, who are “vulnerable” in that they exist on the brink of job losses and poverty in a world where security of employment is no longer possible.

This insecurity among the generally better paid, combined with a realistic unemployment rate of probably more than 40%, makes for the “ticking time bomb” South African Federation of Trade Unions general secretary Zwelinzima Vavi so often warns of.

What the latest budget has done is, on the one hand, to placate the money lenders and the business elite while, on the other, further alienating and angering the majority of South Africans.

If the government is truly committed to radical economic transformation in the interests of all South Africans, it will listen to - and take seriously - the alternative policies proposed over coming weeks and months.

The time bomb is continuing to tick. But for how much longer before an explosion occurs?

Add your voice or just drop Terry a labour question. Follow Terry on twitter @telbelsa.

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