40+ Civil Society Organisations reject proposed increase in VAT: Tax the wealthy to invest in our future!

(Deputy President Cyril Ramaphosa and Finance Minister, Malusi Gigaba). Finance Minister, Malusi Gigaba briefs Deputy President Cyril Ramaphosa ahead of his forthcoming visit to the USA for the IMF World Bank Spring meeting and his meetings with the rating agencies at the Deputy President’s official residence OR Tambo House in Pretoria. South Africa. 18/04/2017. Siyabulela Duda

We are alarmed to hear that the Minister of Finance is proposing a 1% increase in Value Added Tax (VAT) to 15%.

In the light of a stagnant economy, growing debt and a further wave of job losses, we as civil society are taking up President Cyril Ramaphosa’s SONA call to engage his government in critical policy issues. The national budget is one of the most important of these.

An increase in VAT will mean less value for your buck; those with the least money will suffer the most. An increase in VAT will mean the unemployed will have to pay even more for their basic essentials. It is an attack on the poor that South Africa cannot afford. If an increase in VAT is a symbol of what the future holds under Ramaphosa it will mean harder times for South Africa’s poor.

We need state spending, not austerity!
In the context of a substantial revenue shortfall (R50,8bn) in 2017, and a budget deficit of 4.3% of GDP, it is easy to batter public opinion into believing that there is no alternative to austerity. However, as has been the case in Europe where austerity has been imposed, it neither resolved the debt crisis, nor did it do anything to stimulate the economy on a sustainable basis. In a society facing much greater social crises than in Europe, deeper austerity would precisely be the wrong medicine.

If government is serious about tackling youth unemployment then apart from land redistribution and a mass housing programme, the water crisis in the Western Cape suggests further approaches that can be used to realise hundreds and thousands of jobs in fighting climate change. In the same vein, investment in dealing with our transport and energy crisis through the roll out of expanded public transport and the expansion of socially owned renewable energy can absorb many young people into decent and useful work. Similarly, the employment of large numbers of community health workers could not only improve health outcomes and reduce health care costs, but also employ many poor women who in turn would contribute to the economy.

All of these interventions would have knock on effects in stimulating local industries and give them the opportunity to grow the small and medium enterprises – which  government has committed to doing. This, in turn, can stimulate further job creation. Such a redistribution and job creation strategy requires not the cutting of expenditure, but a significant growth in expenditure. The financing can be realised through progressive tax reforms, and development financing mainly from government sources itself.

TAX the wealthy to invest in our future!
Government must abandon its austerity policies and adopt fiscal policies that redistribute wealth to meet basic needs and ensure a people centred growth path.

Some of the ways of raising revenue include increasing personal income tax on high income earners, increasing the corporate tax and implementing a carbon tax. Increasing, sin and sugar taxes should also be considered. All of this should make it possible to relieve the burden on the poor, and get rid of regressive tax policies in opposition to mainstream economists who are calling for VAT increases. In other words, we can meet the immediate needs of dealing with mass unemployment, redistribute wealth without bankrupting the state.

President Ramaphosa, there are alternatives. Use them!

Endorse the statement here

For more information contact Dominic on 0813094973

Endorsed by:

1. #UniteBehind
2. Abahlali baseMjondolo Movement SA.
3. ACTION SUPPORT CENTRE
4. Action Support Centre
5. Africa Unite
6. African Centre for Biodiversity
7. Alternaitve Information & Development Centre (AIDC)
8. amandla.mobi
9. Bench Marks Foundation
10. Botshabelo Unemployed Movement
11. Children’s Resource Centre
12. Come-Act Limpopo
13. Csaawu
14. CWAO
15. Durban South Community Peace Builders
16. Equal Education
17. ESSET
18. GIWUSA
19. GroundWork
20. Human Rights Development Initiative
21. Institute for African Alternatives
22. Judith Smith Development Services
23. Lephalale Community Justice Movement
24. Maokeng Advice And Resource Centre
25. Mawubuye Land Rights Movement
26. Mayine Azanian Movement
27. Midrand Solidarity Economy, Education & communication cooperative
28. National Union of Public Service and Allied Workers (NUPSAW)
29. Peoples Health Movement (PHM) SA
30. Progressive Youth Movement
31. REFUGEE SOCIAL SERVICES
32. SALIPSWU
33. SOUTH AFRICAN INFORMAL TRADERS ALLIANCE
34. South Durban Community Environmental Alliance
35. Southern Africa Green Revolutionary Council
36. Tshintsha Amakhaya
37. Unemployed People’s Movement
38. United Front Western Cape
39. Waterberg Environmental Justice Forum (WEJF )
40. WATERBERG WOMEN ADVOCACY ORGANIZATION
41. Women in Informal Employment Globalizing and Organizing(WIEGO)
42. WoMin Alliance