The Congress of South African Trade Unions (COSATU) welcomes Parliament’s Finance Committees’ recommendations to halt the Budget’s proposals to hike VAT by 1% over two years and not to adjust personal income tax brackets (PIT) for inflation.  The Committees’ call for Treasury to provide alternatives to the VAT and PIT proposals be tabled within 30 days will, if honoured, provide invaluable relief to millions of workers drowning in debt and struggling to cope with the rising costs of living.  We are pleased the Finance Committees endorsed COSATU’s demand for alternatives to be found to a tax hike that would inflict unnecessary pain upon the working class. 

COSATU urges Parliament to elevate the Finance Committees’ recommendations into a binding parliamentary resolution requiring Treasury to return to the Committees within 30 days with clear alternatives to the VAT and PIT proposals.  It will be an absolute travesty for Parliamentarians to raise the hopes of society that these tax hikes can be avoided, only for Treasury to blue tick Parliament, and worse millions of struggling workers and their families.  That will be a calamity and breach of trust that politicians heading into the 2026 local elections dare not play with.

The Federation has tabled progressive alternative revenue and expenditure proposals to government and Parliament that could raise similar revenue without squeezing struggling working- and middle-class families.  These include removing tax loopholes exploited by wealthy individuals and corporations as well as raising taxes upon the rich through income, inheritance, estate and luxury goods duties.  The South African Revenue Service which has been allocated an additional R4 billion should be given space to tackle the R800 billion in existing taxes owed to the state.

Revenue can be generated by engaging the Development Bank, plus the Industrial and Public Investment Corporations to take over some of the state’s economic infrastructure investments and similarly, the National Skills Fund and the Sectoral Education and Training Authorities to do likewise for public employment programmes.  The Reserve Bank should be requested to increase support for the fiscus from its currency reserves.  We remain convinced that the R31 billion that would have been generated through the proposed VAT hike and non-adjustment for PIT brackets can also be compensated for through an expenditure review, including cuts to the executives, travel, advertising, catering and consultants. 

It is sacrosanct that Parliament rejects tax hikes that will place further pressure on workers’ overstretched wages.  Similarly in pursuit of various expenditure options, Parliament must stand firm in defence of the many badly needed proposed allocations to rebuild public services, fill critical frontline vacancies, honour the public service wage agreement giving relief to struggling public servants, investing in key infrastructure to unlock badly needed economic growth, and expanding public employment programmes to help reduce unemployment. 

The various relief measures to cushion the poor, e.g. above inflation increases for social grants, a continued fuel price freeze and expanding the basket of food items exempted from VAT must also be protected.  Whilst we applaud these important allocations, Parliament should adjust the SRD Grants to relieve its recipients from inflation.

COSATU will continue to engage Parliament on sober revenue and expenditure options.  We believe progressive alternatives can be found.  Whilst applauding Parliament’s call in defence of the poor and workers, it is critical these burning matters be resolved with haste whilst adopting the Budget.  This is urgent to ensure the continued funding of public services and to enable the rolling out of various progressive new expenditure items. 

Issued by COSATU

Matthew Parks (COSATU Parliamentary Coordinator)

Cell: 082 785 0687

Email: matthew@cosatu.org.za